Bridging The Gap Between Fiat And Cryptocurrencies

The debate over cryptocurrencies tends to hinge on the investments within the digital Wild West. The key questions revolve around who regulates bitcoin and its peers, from Ethereum to the slew of cryptocurrencies that seem to pop up daily. The exchanges may come and go. Any number of regulatory bodies may levy varying levels of scrutiny. The prices may wax and wane.

Perhaps lost in the shuffle, however, is the actual use of cryptocurrency as currency – namely, a way of getting goods and services into the hands of those who want them. Might a hybrid approach find favor with consumers, amalgamating the familiar and the novel?

To that end, Paycent, a financial platform powered by Texcent, bridges the gap between cryptocurrencies and fiat, housed within the Paycent mobile wallet. The company’s platform is already operational in Singapore, and Texcent is broadening its efforts to bring cryptocurrencies and a roadmap toward microlending to a wider audience – with a focus, initially, on Southeast Asia.

Through a token sale slated for Nov. 2, Paycent will come to market to raise capital to invest in the aforementioned initiatives. Under the terms of that crowdfunding effort, participants will receive newly minted Paycentos tokens.

In an interview with PYMNTS, Sumedha Goel, president and co-founder of Texcent, noted that Paycent has gained traction across 36 million locations in 200 countries. Paycent’s cryptocurrency reach expands across bitcoin, Ethereum and others. The firm has fiat regulatory licenses in Singapore, the United Arab Emirates (UAE) and the Philippines, and is in the process of acquiring the same in Hong Kong, European Union, Bahrain and Qatar.

Goel said the impetus for Paycent came from seeing people line up on weekends to remit money across borders, queuing at, say, exchange houses to wire funds. She said the advent of cryptocurrencies has held promise in both technology and payments – yet even today, you can’t buy a cappuccino at Starbucks with bitcoin.

Thus, she argued, a hybrid approach of cryptocurrencies and fiat makes sense.

Paycent operates across two different mobile apps: one focused on consumers and the other on merchants. They “separate the complications of the user app and the merchant app,” said Goel. The merchant app is designed to accept cryptocurrency from a user via the Paycent wallet or any other cryptowallet, and the consumer can choose to have the transaction convert to fiat at the other end. Thus, in a remittance scenario, she said, a Paycent user could conceivably pay their housekeeper with the mobile app, and the housekeeper could use that money to pay utility bills or expenses in their home currency via the fiat option. There is a single hybrid wallet for fiat and crypto, and crypto-to-fiat funds can be transferred in real time with an attendant 1.5 percent conversion fee.

Goel said the firm’s capital raise and geographic expansion plans envision extending microlending to the underbanked sector. In the Philippines, Indonesia and other countries, she told PYMNTS, more than 50 percent of the population is under the age of 25. The younger generation, now underbanked, will give rise to new businesses over the near and long term.

As Goel told PYMNTS: “In today’s world, why should someone be judged [for loans] based on the collateral they can provide? We have so much more technology, and we have big data right here. Why not use that to provide microlending without collateral?”

The company is in talks to acquire two small banks in the Philippines and merge them in due course to create a bigger platform to enhance its microlending activities. Goel said the roadmap over the next two years includes Hong Kong, Indonesia, Vietnam, Myanmar and then Pakistan, Bangladesh, India and the UAE. Beyond that, the firm will seek presence in North America, South America and Canada.

“The advantage that we have is that we have started from fiat,” said Goel. “We already have existing licenses in a few countries, and we are in the process of acquiring more licenses in other countries.” Familiarity with banking and digital currency licensing processes also proves an advantage in moving into cryptocurrencies, said Goel, as that space “is going to be regulated one day. Without regulation, it is not going to last.”

Proceeds from the token sale, said Goel, will be deployed across licensing, marketing and regulatory efforts.