Paper checks. Foreign exchange rates. Settlement times. All points of pain and friction in cross-border payments and all factors that can stymie cash flow for firms and even the smallest sole proprietors or freelancers that operate in a global, always-on economy.
Earlier this month, GoldMoney, a FinTech that operates a financial services and payments platform that uses gold to settle transactions globally in any currency, launched its Gold Payroll and Gold Payout applications. The platform extends across BitGold’s customer base, including consumers and enterprises, and runs the gamut of B2B payments across supply chain, services-oriented relationships and, importantly, across borders.
In an interview with PYMNTS, Darrell MacMullin, chief executive officer at BitGold stated that when it comes to cross-border payments, especially in a business setting, “there is a growing demand … Travel is becoming more international, business is becoming more international and, more than ever before, people have friends and family who live abroad.” And yet, even against this backdrop, transactions are, at times, prohibitively expensive, noted the executive, with fees that include settlement fees, credit card fees and others, which can easily get into the mid-single digits as a percentage of any transaction, large or small. There’s 3 percent (at least) for interchange fees, he said, and at least 2 percent for FX conversions.
For a few hundred dollars’ worth of remittance or for a credit card transaction (in B2B, picture a supplier payment), the costs can make the transaction itself prohibitively expensive through traditional conduits, and, said MacMullin, settlement times can vary, which can drive up costs should currencies fluctuate wildly.
The Gold Payout application exists as a free enterprise software offering that can be used across BitGold accounts. And in a business setting, the enterprise clients are able to set up automatic payments across end recipients that have both email and mobile phone access. MacMullin stated that the transactions themselves can be used to satisfy international payroll requirements and micropayments, settling instantly, and recipients can opt to be paid in gold or in the currencies they choose, where gold is the conduit to that settlement across currencies. As a global currency in and of itself, gold has universal acceptance. Relatively speaking, transaction costs are quite a bit cheaper than other platforms, said MacMullin, as they comprise a percent of the spot price.
Though still early in the game, noted MacMullin, much of the initial interest comes from smaller firms. He stated that “80 percent of the businesses [we see] are small businesses, and of those, 80 percent are small to mid-sized businesses that are services-based” and ones that bill for time and labor. In essence, this encompasses B2B transactions at the smallest level (which, in turn, benefits workers that may be underbanked or wholly unbanked). The advantages of what MacMullin termed the “closed-loop” system that defines the Payout app include the ability to send recurring payments and schedule simultaneous and widely far-flung (geographically speaking) transactions.
The transactions are backed by gold held by BitGold, said MacMullin, and recipients can elect to be paid in any number of ways. They can choose to hold gold, redeem payments in their local currency or bring payments onto prepaid MasterCards issued by GoldMoney across several currencies.
For B2B payments, the advantages of using gold as a backing for payments also ties into a payments system that may be outside the purview of the central banks but is still tied to the regulatory systems in place globally, said MacMullin. “We monitor every transaction from end to end,” he said, with KYC and AML compliance in place. Transactions can be instantly reversed if need be.