October 28, 2015
Recently, the LTP team had the pleasure of interviewing Chris Kitze, CEO of Safe Cash, on the future of digital currency adoption. Chris shared his insights on the challenges companies are facing with digital currencies as well as new partnerships announcement Safe Cash is making at Money 20/20 in Las Vegas. Here is the transcript of the interview:
LTP: For LTP readers who may not be familiar with your company, please tell us about Safe Cash and the services you offer to merchants, banks and developers.
Chris Kitze: Safe Cash is about providing state-of-the-art technology to banks, merchants and consumers, and removing the friction from moving money worldwide. Our platform, which is based on enhanced blockchain technology, creates better security, more efficiency and works within a legally compliant model for digital payments. We are doing nothing less than digitizing cash and we think it is going to be transformative.
We have a basic implementation for merchants already up and running with Unseen in Iceland. We have been testing it with our loyalty token; it is very much like any other payment integration (such as PayPal) and it integrates with the checkout process. The merchant opens an account in minutes with minimal paperwork; no credit application is required because there is no credit involved. There is no bonding or reserve account since they are accepting tokens that represent cash, like an e-check. The merchant provides the same paperwork they use to open a bank account to get a Safe Cash account and they can start being paid. Online merchants are the first to be enabled, but we will soon have a solution for point-of-sale, brick-and-mortar businesses, so they can accept Safe Cash for face-to-face transactions.
LTP: What are the benefits you offer to your clients? Could you please give an example of a use case where you address issues that are not addressed in the market today?
CK: There are three primary reasons why people like our system: speed, convenience, and complete & final settlement (non-repudiation). Transactions are processed and settled in under 90 seconds, and the interface is very simple and easy to understand. It is also very secure compared to other systems because of the blockchain technology. Every token represents real cash in a bank, so the value is tied to the underlying currency.
This utility is valuable for many face-to-face and international transactions in which people are not in direct contact. Let us say you want to sell a couple of your books at a garage sale to someone you have never seen before and will never see again. How do you want to get paid? Would you take a check or an IOU from them? Most people want cash. You do not want to worry about a bounced check or chasing down your money—it turns out there is a huge number of transactions with this requirement.
If you are a merchant and you take credit cards, you have this huge problem of chargebacks, which run another 1% of your sales. They not only cost you the price of the money you collected but also a penalty fee from the card network. You also need to worry about your cash flow because you will not get paid right away. You have to wait for three, seven, 14, or even 30 days to get paid; you also might have a reserve account for up to a year from which your funds can be clawed back. This is why merchants are very interested in Safe Cash, especially for cross-border transactions.
LTP: Are there any challenges with digital currency adoption that Safe Cash is particularly focused on addressing?
CK: There are technological, banking and regulatory, and consumer adoption hurdles that need to be met before things go truly mainstream. The technology will take another 6-12 months before it has all the features required by the mainstream; it‘d take a few banks to cooperate and, of course, the regulators will need to give everything an all clear. Based on things we are seeing, this will all happen in 2016. Compelling need will drive the consumer adoption, and right now, this looks as if cross-border and instant payments have enough immediate benefit to consumers followed by cross-border merchant transactions.
We are all looking for the killer app, but the irony is the killer app is probably embedding the technology into existing applications and existing payment flow. Embedding into existing applications does not require much more than a robust API because we are turning money into a URL. That means it can go anywhere the Internet goes and function with a click.
For example, let’s look at Uber (we are not talking with Uber, this is just an example). Millions of people use Uber every month and they spend a huge amount on credit cards & compliance handling their payments. Digital currencies could tie them right into their customer's bank account, do an automatic cash payment to the driver, split the payments to Uber and now, Uber does not have to handle the cash—they just get their commissions. That would mean they do not potentially need the money transmitting licenses as the payments are going from rider directly to the driver and Uber gets a split at the time of that payment. Fees will be much lower. Now, if you were Uber, you would want these riders to use the Uber wallet when they shop elsewhere because just like a credit card, you will get a bit of any transaction fees generated by that user and you'd have quite a few cross-marketing opportunities. How many people already have the Uber app? Isn't that a wallet? That is my point, these wallets are already installing on millions of smartphones.
LTP: Where do you see the future of digital currency? What are your expectations of how the industry will evolve and what are some milestones for Safe Cash?
CK: The future of digital currency is very bright. We think it could replace most paper money in five years because it has a huge benefit for central banks & governments, banks, and for merchants & consumers. In places like Iceland, you do not see much paper money at all; people mainly use card-based systems. It is much more convenient than paper money; it is more secure and harder to lose (when properly implemented). Banks benefit because the cash is an asset in the bank. Central banks and governments can implement public policy. Consumers and merchants can transact in new and powerful ways. The total available market for digital cash is literally every human on Earth.
As for the industry, it is going to go through some growing pains as companies test out the use cases and features that will make the winning formula. Regulators will need to be comfortable and safeguards & compliance have to be built in. Credit/debit cards went through the same process and I can remember newspaper stories when it was a big deal that a person drove from the east to west coast paying for everything using only a credit card and no cash. What took years will now take months or days as most people have smartphones and are familiar with this technology.
The milestones for Safe Cash revolve around building partnerships, improving the features and functionality with our network that will benefit our partners, merchants and consumers. We will need banks in many countries, applications that drive usage and integrated blockchain that provide improved remittance and stored value products. It is a big list and a big goal, but we are staying much focused for now on our first use case around the fiat currencies.
LTP: Tell us more about your participation at the Money 20/20 conference and the company's announcement about the initial partner bank. Who are you partnering with and what is the goal? What benefits does this collaboration add to your clients and what does it add to your service?
CK: At Money 2020, Safe Cash Payment Technologies, Inc. will announce a partnership with CleverCoin to implement the revolutionary Safe Cash platform and offer digital cash in countries operating under the EU banking system. The partnership, which is fully compliant with European banking regulations, allows Safe Cash to provide new instant payment functionality for consumers. Transactions will be facilitated using CleverCoin’s API to integrate with the Lemon Way's mobile payment solutions. Funds for issued Safe Cash Euros are stored with LemonWay’s banking partners.