Payment Methods

Mezu: What It Would Take To Replace Cash

Mobile Commerce's Global Growth

When Yuval Brisker landed in Tel Aviv for a family function, he didn’t have time to stop at a bank and exchange money before hopping in a taxi.

At the end of the ride, neither the driver nor the rider wanted to be responsible for giving, receiving or holding onto the kind of personal information needed for a credit card transaction or a digital peer-to-peer (P2P) transfer. But the driver was more than happy to accept Brisker’s American $20 bill.

That got Brisker thinking: Although there are many useful digital payments tools on the market, there’s nothing that really replaces cash in the way we know it. The ubiquity and anonymity of cash are key reasons that the above scenario worked out, with both parties walking away happy.

While tools like Venmo, PayPal and Square have their place, Brisker said they function more like a virtual check; they’re focused on sending a payment to somebody you know. That, he said, is not the nature or definition of cash, which is a non-personal, immediate tender that leaves no trace – a very appealing quality in today’s privacy-concerned world.

Brisker sees those tools as first and second generations of digital payments. He believes the next generation must be more holistic, taking a view of the entire market and enabling users to give and use money in the myriad ways they wish to do so.

Yet creating a true cash replacement is no easy task, especially if one wants it to work for everyone, everywhere. A certain amount of anonymity must be sacrificed to meet regulations like anti-money laundering (AML) compliance standards. And, of course, there’s the sheer task of getting it to work in all those different cross-border environments.

Brisker, a serial entrepreneur who previously founded TOA Technologies, believed he was up to the challenge, and the Mezu mobile app was born. In a recent interview with PYMNTS, Brisker – Mezu’s co-founder and CEO – shared the challenges the startup has had to surmount, what lies ahead and his ultimate vision for creating a worldwide digital replacement for cash.

Why Cash Still Reigns

Around the world, $8.1 trillion USD worth of cash is still being used, Brisker noted, referencing the latest Global Cash Index by PYMNTS. Cash may not always be the most convenient, but it offers enough advantages that many people still prefer it over P2P payment apps.

The key to cash, said Brisker, is mobility and transportability. Anywhere one goes, one can pull a dollar out of one’s pocket and it still has value. That borderless element of cash, he said, is one of the reasons it remains so powerful even today, when so many other payment options are available.

Brisker added that there are also large populations that rely on cash simply because they don’t have access to those other options. They may be unbanked or underbanked because of where they live or their socioeconomic class.

For those people more than anyone else, said Brisker, a cash alternative is needed – one that can enable them to start participating in the formal economy, with or without a formal bank account.

Finally, people are more concerned than ever about the privacy of their sensitive personal data, said Brisker, so why share it unnecessarily for P2P transactions when cash will get the same job done, without the added risks?

“In this age where everybody’s concerned about privacy, the most important thing to focus on in privacy is your money,” said Brisker, “because what you do with your money is your business.”

From the Ground Up

Brisker said most current apps are focused on the affluent millennial, but there is a gap where less privileged, working-class folks are not having their needs met by the tools that are available. Mezu wants to start by giving underserved people a gateway into the formal economy right at home in the U.S., where the startup is based.

Brisker said a true cash alternative must serve all people, not just the digital elite – especially since one major use for cash is paying working-class service providers who don’t always have bank accounts.

Mezu, said Brisker, aims to give those people a way to receive money they otherwise might not have been able to accept and store it in what is essentially a virtual bank account, complete with FDIC insurance through a partnership with Virginia-based MainStreet Bank – but without having to hold a formal bank account themselves.

Within the next six weeks, Brisker said Mezu plans to debut an in-app debit card so that these underbanked users can enter the economy and start using card payments both on and offline.

Once this population has been reached, then the startup can start to grow into other socioeconomic and geographic categories, Brisker said, with merchants and Canada next on the list.

Growth Trajectory

The company plans to take a grassroots approach to getting the word out this summer, with brand ambassadors canvassing places around L.A. where people tend to congregate and spend time and money: farmers’ markets, festivals, bars, malls and more.

First stop? LA Pride weekend, which Brisker noted is the city’s largest public event of the year. Mezu partnered with the organization to use the app for donations so that participants could make those small, anonymous donations that were once powered by cash.

People aren’t going to pull out the checkbook for a $1, $2 or $5 donation, Brisker said, and they’re unlikely to want to cough up their credit card credentials for it, either. That’s why he said donations are a great use case for the Mezu platform, which keeps users’ private info, well, private.

At the same time, Brisker said Mezu plans to leverage digital and social tools, both paid and organic, to take the platform national. The value proposition, he said, will be built on the idea of privacy and its importance in the payments space – an angle that’s sure to hit a nerve for many potential users, regardless of their socioeconomic class.

Challenges

Mezu promises anonymity, but to comply with laws and regulations, it must collect some information from users, even if that personal data is never shared or sold. Customers must provide enough information to meet KYC – know your customer – requirements.

However, said Brisker, they can give and get money without sharing their email address, street address, phone number or handle, and they also have the option to go fully incognito during a transaction to create an additional layer of protection if they so choose.

Mezu also promises to work anywhere in the world – at least, someday. The vision is for users to be able to get on a plane in the U.S., get off in London and have the app – using location data – offer to switch them into the local currency.

But the world is a big and complicated place as far as payments are concerned. Brisker said the company is currently setting up a subsidiary in Canada that will have its own bank account, against which the currency transfer can take place in the background. The same will have to be done across the 26 countries in Europe where Mezu aims to launch next, and eventually, for every country in the world.

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