A story untold..
Every dollar sent in form of remittance tells a story which is in many cases remains untold. Let me tell you my part. I was brought up in a joint family of 7 people, my aunt and uncle, their daughter and eldest son who is an immigrant, along with my mom and dad and me. At any given time this family of seven used to rely on the remittance sent by the eldest son aka my immigrant cousin who used to live in the USA and sent money back home every month. A delay in payment used to have dire consequences and we’ve gone through our fair share. This is a very common scenario in many third-world countries like Bangladesh where I’m originally from. When I was 18 I left my family and my home and moved to a better place in search of a great opportunity. For every major festival, I would save some money to send back home. Living thousand miles away from family and home during these festivals is very hard, so hard you can’t put it into words until you experience it. So, when we sent remittance back home it signifies our struggles, our blood, sweat and tears and every moment of our hardships and the sacrifice of our diaspora. I’m privileged that I work in tech, I can’t imagine the poor souls working in construction in the middle-east or oil fields in the middle of the desert in horrendous living conditions and compensated 1 dollar an hour for 16 hours workday with zero regard for any labour rights. But we put up with this all, all in the hope that our family will reap the benefits of our labour. But we don’t live in a perfect world, do we?
New bottle old wine
I’ve dealt with all of them, from my childhood days, from my cousin sending remittance in Moneygram and western union to myself using transferwise, taptap send, remitify, unionpay and good ol’ bank transfer. And I have the same question, are we not entitled to reap the benefit of our labour? Just imagine yourself working in a construction site for pennies and the conversion rate is this
Now before you tell me that this rate isn’t half bad, I would like to ask you to wear the yellow helmet in a desert and work in scorching heat for 1$ an hour for a day. Mind you this is before the government takes their cut and you actually withdraw the cash from a mobile banking provider who charges each time you withdraw any cash for spending. Okay, fair enough, I get it the world isn’t fair. But even in an unfair world, you should be receiving money in minutes not hours. But this is the transfer time looks like
Now imagine it’s an emergency like your mom is sick or your sister’s marriage is on the verge of being postponed due to bride groom demanding a new amount of dowry. Trust me this kind of situation happens a lot and even do you’ve money you are at the mercy of these sloth speed transfer services.
Coming from this experience me and my team has decided to develop Paysum a relatime 0 fees remittance transfer solution.
SFTP- a frictionless 0 fees fiat-crypto transfer protocol
Here is what happens when you want to send money with the present web3 infrastructure. At first, you’ve to get stablecoin from p2p or cex aka you’ve to convert fiat to crypto and then you’ve to transfer the crypto to your receiver. It’s much faster and frictionless than the existing financial system but it has some friction nevertheless. Most of the working-class immigrants are not crypto-literate and if they’re the family back home doesn’t have the means to convert the crypto without services like Paxful and local bitcoins which have an exuberant amount of fees and lack convenience and speed. So, how can we change all of these?
SFTP or simultaneous financial transfer protocol developed by us. The concept is borrowed from the traditional bank cheque. Each time you’re writing a cheque you don’t have to physically access cash. The same goes for us. In our case, we create two liquidity pools between the two currencies.
When someone from pool country A wants to send money to pool country B. First, we convert the fiat to crypto in POOl A and simultaneously de-convert the same amount from POOL B into fiat and sent cash directly to the mobile banking to the receiver.
We later maintain the equilibrium of the pool by doing the transfer monthly or bundling up every 1000 transaction and by doing it at once.
In this way, SFTP ensures transparency and trustless transaction with real-time speed and 0 fees. And as this protocol matures it’ll be infinitely scalable with forex support where 130+ currencies can be integrated and transferred between pools.
Anti-money laundering system
The novelty of this protocol is it connects the fiat transaction on-chain which wasn’t possible before with existing technology. Every fiat transaction that is done SFTP explorer. In this way, we can counter potential money laundering from the third world to first world countries.
Business Model
I believe our business will be value-driven rather than profit-driven, The whole point of our system is our UI/UX and everything is designed so that everyday people can use it. So, we are user-centric rather than focusing on investors. However, napkin math shows that even if we capture 1% of remittance transfers globally and charge 1% of the total transaction we will be sitting on millions monthly. If you expect us to do that you clearly don’t understand why I’m doing this project in the first place and clearly didn’t understand the struggle of a working-class immigrant. After all, I don’t want to take from the hard-earned income of my fellow brothers, i can’t live with myself knowing that our profit is leeching off the hard-earned penny that a construction worker saves by skipping meals so his family back home can eat.
So, how will we stay afloat? By good ol’ network effect. Our plan is to ensure mass adaption and capture the lion's share of the market. After enough users start using our platform we will introduce our won debit card and one-click payment gateway integration for a physical and online merchant to accept crypto payments. And build a CEX or DEX on top of it.
It’s mind-boggling that most of the people in my country and other third world don’t have access to online debit and credit cards. As the family of the remittance earners start using our service they will easily adapt to our debit cards and more and more businesses will start to integrate our payment getaway to accept crypto and cash. The addressable market is all of south asia and sub-Saharan Africa.
Only 2% of people in South Asia and Africa have access to credit. As a result, this country is infested with loan sharks who give away loans at about 10-20% interest rate. And as lower income demographics can’t access to banks for loans they’ve to suffer. As our network is decentral and we can easily reach rural areas virtual credit cards can be implemented. We will be the true decentral bank for the unbanked.
Multi-sided Market & Network Effect
A multi-sided market is an intermediary economic platform having two or more distinct user groups that provide each other with network benefits. The organization that creates value primarily by enabling direct interactions between two (or more) distinct types of affiliated customers is called a multi-sided platform. Our payment app fits this bill perfectly. Here users from various demographics can come to use our zero fees zero latency payment platform.
Let’s take credit cards as an example. Customers prefer credit cards honoured by more merchants. On the other hand, merchants prefer credit cards carried by more consumers. These two demographics complement each other in order to make a thriving ecosystem around a product.
In our case, the sender can send the money in the currency he’s earning, so he doesn’t have to wait for banks, nor does he have to deal with the currency conversion or the long time it takes to send the money overseas. On the other hand, the receiver can just get the money from his/her wallet to the bank account without needing to go through some exchange or pay the elevated fees that come with long-distance money transfers.
On the other hand, the instant transfer of crypto comes with a cost. In this day and age, crypto isn’t widely available enough that people can use crypto in day-to-day use. They eventually have to convert it into fiat money in order to spend freely. This problem is more apparent in third-world countries. We are combining the instant transfer of crypto with the wide use of fiat currency to make a system that benefits every group of users that can use our system.
Multi-chain Integration
Our project depends on the success of network effect, so in order to maximize our success potential we have integrate as much chain as possible for smooth transaction and leverage the early adopters’ network effect. In economics, the network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. In our case, the network effect works both directly and indirectly. The more people use our service, the pool amount will increase, and the transfer cap will be raised to a higher level. As a result, people can spend more money at any given point. Plus we can provide additional features once a certain number of users is reached.
According to the united nations, 232 million people are working overseas, which is around 3.2% of the entire world’s population. If we can grab 0.1% of the market, that’s 232000 users per month. If they all send at least 10 USD per month, our app will have a 2.3 million dollar transaction cap each month. Coupled with the domestic transactions that can also happen, the sky is the limit for this project, as it’s tackling an issue that plagues the entire world - slow money transfer with high fees.
Risk Assessment
I wish it was sunshine and rainbow but unfortunately, we have a huge challenge ahead. The liquidity pool of 130 currencies is a huge issue. We will have to provide the liquidity, in the beginning, I don’t have any wish to take investors' money to create these pools as that will create financial issues and we will be another celsius disaster.
The laws and regulations of some countries are not crypto-friendly yet and obviously, the existing financial institution will not be happy as we are bypassing them in every way. As long as we provide the remittance fees to the government and connect central banks for purchasing native currency to create the liquidity pools we will be alright. But, in order to make our business plan to function and start generating profit we’ve to wait for mass adoption.
Conclusion
I’m very proud of what we achieved to do within a span of a month due to Solana Summer camp. Our prototype is fully functional in Solana app chain. We are looking forward to integrating more chains into our ecosystem. We’re a small team and we brainstormed and develop the working MVP. I believe with enough time and resources we can really envision this payment system to reality. All our work will remain open source regardless, of whether we win the summer camp or not, I believe someone out there will use our sftp protocol, and underlying concept and be able to tilt this unfair world a little bit towards the unsung hero of our economy- the ex-pats, the immigrants.
