Digital Treasures Center (DTC) observed that the payment industry is fragmented. Singapore, with a population of around six million, has more than 500 payment companies, with some providing just remittance services to major international or listed companies with multiple payment solutions.
As a result, merchants often have to onboard with multiple payment companies if their business requires multiple payment solutions. This drives up their operation manhours and costs, which eat up the already razor-thin margin that the merchants have. Based on the Singapore’s Payment Roadmap report, slow settlement speed, cost and security are the major concerns from merchants when it comes to payment solutions.
In order to alleviate the merchants’ pain points, DTC looked to cryptocurrency as the key driver to reduce cost, and improve the settlement time since it does not fall within the sphere of the fiat ecosystem. Accepting cryptocurrency also provide new customers segment for the merchants and help them grow their businesses.
DTC’ payment solution offer merchants the flexibility to accept crypto, cash, card seamlessly in one single platform to help merchants better manage their funds and grow their business. We term this as Payment 3.0.
Desmond Yong is the chief strategy officer of Digital Treasures Center, known for leading the company to obtain the nod of approval from the regulator, the Monetary Authority of Singapore, to perform payment services including the use of cryptocurrency.
What has been the traditional company response to financial technology innovations nationally?
The traditional companies often focus on improving their existing products in term of improving and/or new features to better serve their existing customers. With the payment industry, which is already a mature one, companies often revolve its products around the existing standards that were put in place decades ago. Some of these standards, unfortunately, aren’t able to catch up with the speed of innovation and ended up limiting the growth of the industry as a whole.
Often, the pain points raised by merchants were the high transaction cost, and slow settlement time when it comes to payment, which are the by-product of standards and infrastructure that were put in place years ago and at the moment could not catch up with how the world is evolving.
How has this changed over the past few years?
Companies understand the need to provide a single entry point for merchants for ease of use and managing of their fund flow and we see more partnership among different payment companies, where they come together to provide a single offering that can accept multiple form of payment. While most payment companies still focus on their 1-2 core product offering, they now partner with other companies that can offer complementary products and package it into a single offering to merchants so that they can accept more variety of payment modes.
However, core issues still persist. Even with partnership among the different payment companies, most solutions aren’t truly seamless and merchants will still need to manage more than one platform. Second, the payment solutions are still within the fiat ecosystem and infrastructure and thus been constraints by its limitation and structure. Thus, the issue of transaction cost and settlement time are likely to persist.
Is there anything that has created a culture of change inside the company?
The payment industry is saturated and companies are either forming partnerships to offer more products to their merchants or creating a closed-loop ecosystem to “lock in” their merchants. This, from DTC’s perspective, is unhealthy and we see that unless there is a major breakthrough, the industry is likely to face stagnate growth. This is something that the team at DTC does not sign up for. We wanted to inject the sense of excitement and growth within the industry and provide real breakthroughs that do not hinder the existing ecosystem or infrastructure. In short, we are looking to find the “blue sea” for the payment industry and DTC.
What Fintech ideas have been implemented?
DTC found its “blue sea” opportunity in cryptocurrency. Cryptocurrency as a form of payment method can break away from the existing payment ecosystem as it does not depend on the fiat ecosystem and structure that other payment methods are adhering to and it is able to create its own payment ecosystem as well as infrastructure that can better align with the current speed of innovation.
The team also understand the market will take time to shift towards a new form of payment and the key to success for DTC would be how we can provide them the flexibility to choose crypto, cash, card in their payment solutions to meet their needs and interoperability between fiat and crypto ecosystem so that merchants can shift between the two seamlessly.
What benefits have these brought?
With DTC payment solution, merchants can enjoy the flexibility of accepting crypto, cash, card seamlessly and on/off-ramp fiat and crypto within a single platform. By allowing crypto payment for merchants, it opens up new customers segment. Cryptocurrency is gaining popularity and globally many are holding onto cryptocurrency. By allowing this group of customers to pay via their cryptocurrency for goods and services, merchants open up their businesses to this growing group of customers.
Secondly, as cryptocurrency is on the blockchain technology, they are not bounded by the fiat ecosystem. The transaction cost will generally be lower than traditional payment solution simply because it is a direct transfer of cryptocurrency from customers to merchants wallet. Also, this will significantly improve the settlement time as there is no intermediatory entities to process the transaction and directly with DTC.
Do you see any other industry challenges on the horizon?
Regulations ambunity and differences in different countries for cryptocurrency remains a key challenges for cryptocurrency companies. For example, in Thailand payment in cryptocurrency is banned while UK is looking to regulate stablecoins as payment. Companies would need to understand and navigate the different positions that countries have on cryptocurrency. That’s why DTC decided to base in Singapore where we have received the in-principle approval from the regulator for digital payment tokens (commonly known as cryptocurrency) and other payment services. This gave us the clarity of the regulations for us when we provide our payment solution to our merchants.
Can these challenges be aided by Fintech?
Fintech can aid companies such as DTC to comply with the regulations and requirement that the regulators have set for licensed entities. It allows us to monitor the transaction, onboard our merchants and perform AML/CFT checks using technology so that we can monitor it in real-time, reduce manpower resources and cost, improve accuracy and to make decisions quickly. This will help improve the overall industry’s standard in meeting the regulatory requirements and ensuring that the cryptocurrency payment ecosystem can innovate and grow without the danger of being abuse by the bad actors.
The cryptocurrency payments landscape look set to grow and companies such as DTC which are being regulated early will have the first-mover advantages. Sometimes, when an industry reach a mature stage, it could be hard to move away from the established structure that provide stability for the industry but that could also limit innovation. In order to innovate, sometimes it is worth looking outside the established structure and start something new. While there might be ambiguity in the beginning, it can be rewarding for the first-movers where they can innovate without the limitation of the existing ecosystem and capture the market share before others come in.