Building The Cross-Border Blockchain Payments Rail

Align Commerce made the news this week after picking up a $12.5 million funding round, led by Kleiner Perkins — reportedly its first toe in the bitcoin waters.

Align Commerce uses blockchain technology to move money efficiently and cost-effectively between parties around the world. Bitcoin is the “container” by which these payments are transported, which gave the media all the bait it needed to position Align as a bitcoin company. That’s not entirely fair, but let’s just say that it’s hard to take the bitcoin out of the blockchain, at least right now (this piece provides that color commentary). 

But bitcoin isn’t what Align Commerce CEO Marwan Forzley said drove Kleiner to make the investment. As Forzley explains correctly, bitcoin is a global currency with a stored value that has a fluctuating price; blockchain is how money is moved between two endpoints without involving banks. Bitcoin is the container that the blockchain uses to move those payments between those two endpoints.

And that's where its most recent major funding round comes into play and why Forzley and Kleiner are so excited: They recognize the value in blockchain rails.

"It's an acknowledgment of the problem that needs to be solved in the market. That problem is that cross-border payments are a big mess," Forzley said.

That mess, he goes on to explain, is the time, the money and the friction-filled experience it takes to move money between countries. And for businesses who move money via banks, that's often the case, he explained.

"It's an old-fashioned experience that requires correspondent banks to move the money. That transaction goes from a bank, to another bank, to another bank, to another bank. The more banks as intermediaries, the more costs and more time are involved in moving the money," Forzley said.

The blockchain is a new set of rails, or as Forzley describes it, a tool within an important tool box. Align Commerce, Forzley says, is the Tesla with an eight-cylinder engine in a world where most are still driving gas-fueled cars.

"What this engine brings is the ability to move transactions in real time, around the world, at a cost structure that is simpler than what you get at the banks," he said. "The most important part is really the ability to move money in a simple way around the world. That's really what attracts all that attention [from investors]."

The key point about blockchain, he reiterated, is that it brings a global infrastructure. The blockchain, in a sense, is the "glue that connects all the various payment systems together," Forzley said. It allows transactions to move cheaper and in real time between countries.

"That infrastructure is a very interesting infrastructure compared to what you get today from existing systems. The distributed infrastructure is global in nature," he explained.

Align Commerce's infrastructure is fundamentally different than traditional financial services in another way: The action of sending and receiving payment is done by email. There's no need to know bank account numbers or routing numbers — all that is needed is a business name and email. The payee gets notified and is able to collect payment in the click of a button via email.

And the FX fees?

"Everything is based on a domestic payment, so you pay domestically and you collect domestically. Everything is administered on email," Forzley said, noting that the actual act of moving money is done with multiple rails.

Think of it like a global ACH," he said.

Align Commerce’s goal is to cut costs, reduce processing times and make the SMB payments experience seamless. And with its new funding, it’s going to be able to expand its vision.

"We fundamentally believe that the existing experience with wire is really messy. What we are bringing to the table is a fundamentally different experience. It's an email base between businesses with trackable payments, transparent foreign exchange and a much more simple, streamlined experience that is cheaper than the bank," Forzley said.

Still, the concept of electric cars — even ones with powerful engines — is a transportation option that only the early adopters, so far, have latched onto, as sleek and environmentally friendly as they are. The blockchain has yet to be tested at scale, and the distributed network of miners, who make money from the bitcoin that transports the payments, must be incented enough to keep investing in the innovation needed to keep their new rails shiny and fast.

It’s early days with lots of excitement. Business models will evolve, and lots of players are investing in the blockchain as an alternative to existing banking networks. Time will tell if the financial services industry goes “all electric.”

 Bitcoin Tracker Week 100

The Bitcoin-ISIS Connection

In February, reports surfaced that bitcoin was funding ISIS. Bitcoin is said to be appealing to terrorist groups given the obvious absence of a paper trail and its unregulated status that makes it more difficult to connect the funding source to the organization it could be funding.

Now, with the Paris attacks top of mind in the conversation, the EU cracked down on bitcoin in its latest effort to cut off any possible funding to the terrorist group. A Reuters report on the subject said that EU officials are gathering today (Nov. 20) for a meeting to discuss how to "strengthen controls of non-banking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by prepaid cards."

Bitcoin, of course, is the most popular digital currency that allows money to move without bank interference. That also means that banks don't have the ability to track suspicious transactions, which is something they have recently been urged to do in the U.S. as a way to target possible ISIS locations.

The Bitcoin-Only Bank?

The next-generation bank might be all about bitcoin. That is, if the founder of the NextBank Project has his way. Dimitry Voloshinskiy, who was recently featured by TechCrunch, is on his way to making the first bitcoin-based bank.

Perhaps bitcoin and banking can work together? But how? And is it legit? Those are the questions on the table so far.

“We are a 100 percent online bank. There is [r]emote account opening in [a] majority [of] cases, and we are thinking about the bitcoin community. We are happy to welcome bitcoin companies, traders and forward-looking entrepreneurs. NextBank is the first bitcoin-friendly bank,” Voloshinskiy said in the interview.

NextBank claims that it allows customers to open an account online in under 20 minutes. They can do so by providing identification information, like a passport or utility bill, on the application. Its website says the bank will be open to customers in mid-2016 in the U.K., France, Germany, Spain, China, Malaysia and Russia.

Bitcoin Goes Charitable

The bitcoin community just got the opportunity to get a bit more charitable.

Fidelity Charitable, the charitable savings arm of Fidelity Investments, announced this week that it would enable its donors to support its charities using bitcoin. The majority of donations that come through this mode come via capital assets, like publicly traded securities, private business shares and real estate.

But bitcoin could open its donation pool wide open.

“Enabling donors to contribute bitcoin to their donor-advised funds is the latest example of Fidelity Charitable’s commitment to making it as easy as possible for donors to support the charities they care about with the assets at their disposal,” said Matt Nash, SVP of donor engagement for Fidelity Charitable. “There are many tax advantages to donating long-term appreciated assets, and that ultimately means more money to charity.”

The New Currency In Town

The cryptocurrency exchange CCEDK might soon give bitcoin a new purpose.

The cryptoexchange has launched Obits, a new digital currency that acts as tokens to be used to reward account holders with a portion of revenue that comes from transactions on the exchange. Obits, ironically enough, can be bought with bitcoin and fiat currencies.

Ronny Boesing, CEO and founder of CCEDK, was quoted in a Forbes piece explaining that Obits would be hosted on OpenLedger, which has been called a “revolutionary FinTech platform.” That platform is attempting to use the decentralization of currencies to its benefit because of the speed capabilities.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.