Best2Pay Russian payment system’s founders headed by Kirill Radchenko are building an international financial platform (an IT system and a payment gateway), which could become a basis for FinTech startups worldwide. For these purposes a special company, Paygine, has been registered in the US. At the moment, Kiril Radchenko is CEO in both Best2Pay and Paygine. Earlier, he headed a division at SEB Bank (SEB Group, Sweden), where he first was in charge of the payment cards unit and then the business development unit. All in all, Radchenko has had 13 years of managerial experience in IT, business planning and banking products development.
Platform’s capacities
At the platform the team offers, various financial and commercial projects can use multiple financial services such as Internet acquiring, cryptocurrencies exchange, monetary transfers between banking cards of any banks or jurisdictions, e-wallets, cryptowallets, money transfers, Peer2Peer services.
Some IT solutions have been developed within the national Best2Pay system. Jointly with VISA and MasterCard, a special program was designed in Russia for loan repayment/account replenishments from banking cards. Card-to-cash service was offered envisaging a transfer from a bank card to any location in the world for a subsequent cash withdrawal. A Peer2Peer platform was launched. It is therefore to a great extent a matter of enhancement and customization of the products already in use in Russia. Products modification will take place after an ICO which is arranged by RBM Group.
It is expected the customers of the platform will be FinTech service providers, P2P platforms, online shops, stock and currency exchanges, exchange offices, and money transfer systems.
If a platform customer is, for instance, an online shop, its buyer can use Paygine to pay for a good at the shop’s webpage with a cryptocurrency (merchant account service). If a customer is a peer-to-peer marketplace, Airbnb, for example, then Paygine will help renting some premises and paying with a cryptocurrency. Besides, the customers will in fact be able to promote the services of the platform as their own brands and use the services to create their own products. The platform will thus be operating as a Whitelabel.
“We offer our customers a possibility to promote their products and services as their own brands, by providing them with a financial and legal umbrella anywhere in the world”, Kiril Radchenko says. “Our customers will be able to expand their own business and marketing without being concerned with reporting to their local regulators, compliance with the requirements of KYC/AML, etc. All that is our responsibility”.
Inhouse bank
For international monetary transfers, the platform intends to use cryptoassets as transfer currencies. At the first stage, such generally accepted cryptocurrencies as Bitcoin and Ethereum will be used. At a later stage, Paygine’s own tokens may be an option.
An important feature of the project is the fact its creators plan to purchase a bank of their own, for it to act as a settlement center for the entire system. Such a bank is to be purchased in a jurisdiction favorable for a financial business, in Switzerland, for example. The company needs a bank of its own since an alien bank can at any moment block any financial transaction which it does not understand and finds suspicious. Yet buying a bank is a lengthy process, so at the initial stage Paygine will probably have to negotiate provision of settlement services by an outside lending institution. As Paygine representatives told Invest Foresight, negotiations with some Asian banks are underway at the moment.
Launching the project will require a lot of time in general, in part as it is necessary to obtain licenses in various jurisdictions. That includes first of all a license for payment transfer services in the USA. Being granted such a license may take up to a year.
Kirill Radchenko gave Invest Foresight a detailed explanation of why the project needs a bank of its own.
“In the US, we launched with some partners a system of money transfers from the USA to Mexico, based on Bitcoins. We designed an IT system and finalized all legislative aspects. Yet at the stage of negotiating our cooperation with banks we started facing problems as banks were not ready to deal with Bitcoins. We confronted an identical problem in Europe when attempted to launch a channel of transfers delivery. Another issue we faced in both USA and Europe was the financial institutions’ inability to employ Whitelabel and grant through API a full range of services we required. As a result, our clients had to deal with their counterparts directly, submitting a package of documents and using their interfaces, etc. As we learned later, those two problems are confronted by over 79% of all FinTech startups operating in cryptocurrencies”.
Adjusting bank to cryptobusinness
According to Paygine’s CEO, the company does not intend to build a neocryptobank, but is creating a platform on the basis of classic banks. In such banks though, all technologies, inhouse procedures and the overall system will be specifically customized to deal with FinTech and cryptocurrencies. All of the internal policies and procedures will be developed to account for all requirements of KYC/AML and local laws, and will be specifically adapted for FinTech operations.
“We will not attempt to adjust existing classic internal procedures and systems to the needs of FinTech and cryptobusiness, while continuing to service classic businesses like some other banks try to do. From its very start, our platform is created to solely provide services to FinTech and cryptobusiness entities. Only availability of fully functional banks of our own can ensure comprehensive risks management and decisions making when operating in a new and dynamically developing market segment”, Kirill Radchenko says.
According to company representatives, to launch the project, including acquiring a bank, investments of about $30 mio will be required. By now, somewhat a million dollars has been raised.
When asked about the platform’s profitability, Radchenko noted that “Best2Pay managed to break even within three years of its launch. Yet, we were starting from ground zero then. The new project is based on an already existing platform. We anticipate that it can break even in 12 to 18 months after its launch”.
By Konstantin Frumkin