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Better Payments: The Core Pillar Of A Booming Cryptocurrency Market

In spite of the relatively low market penetration of solutions built on blockchain, few can argue that it doesn’t enjoy its fair share of notoriety. Regardless of whether people recognize blockchain for its role in popular speculative cryptocurrencies like bitcoin, or for the quiet way it threatens to disrupt status quos across the globe - it’s now officially a known entity. The stage has been set for the young technology to realize its much-lauded potential. It comes as no surprise that innovative businesses are already working to be the first in their sector to introduce a blockchain solution, and become the standard by which future entrants are measured.


The nearly infinite applications of blockchain aside, there is now just a single purpose propelling most of the infant industry’s growth - the worlds enormous, bloated, cross-border payments industry. The first real use for blockchain was to support bitcoin, which indirectly addressed the problems in the payments sphere under the guise of a currency that was much cheaper and faster to transact with, but has since proven inefficient at doing so. By contrast, more resolute blockchain projects that are focused solely on invalidating existing payment solutions now lead the race to adoption.

Propping Up Global Payments

For 2017, Statista estimates that the total revenue of the global mobile payments industry reached $780 billion, and is projected to eclipse $1 trillion in 2019. This huge industry exists to support the payment channels that run between individuals, businesses, and institutions everywhere. Though it might be easy to assume that the exact dollar amount of one’s online purchase travels instantly to the merchant’s bank account; this couldn’t be further from the truth. The path from the shopping cart of any e-Commerce retailer to their bank account is long, slow, and siphons fractions off the money as it moves. Disrupting such a paradigm would prove lucrative to any entity that can improve on its speed or cost.

Payment processors on both sides of any transaction take small fees for their services, which add up quickly over time and impact a business’s bottom line. There are fees for transferring between the senders’ bank to a national bank, between national correspondent banks, automatic clearing houses, credit card issuers, foreign exchanges and more. In some cross-border transactions, fees might climb to 10% of the initial transfer amount. In fact, over 80% of the payment industry’s revenues were derived from B2B fees in 2015. The pillar supporting it all—the SWIFT messaging protocol—takes average taking between 3 and 5 days to transfer a payment. This does not justify the fees it charges for such transactions.


The Impetus for ICOs

Any solution that makes the existing one obsolete is beneficial for every stakeholder on the value chain, from the smallest to the largest. Blockchain is the likeliest candidate due to the impressive progress that it has already demonstrated to the market at large, and so blockchain-based projects aimed at the payments sector are garnering big financial support. The primary way that these blockchain businesses generate working capital is by holding an ICO—or initial coin offering. During an ICO, investors buy the company’s tokens that they’ve minted on the blockchain, using their more liquid cryptocurrency like Ethereum. In exchange for coins with greater relative value, these investors can both speculate on the future value of the tokens and use them to engage with the company’s products or services. In the case of SGPay's ICO, only Ethereum is accepted.

Countries with progressive fintech laws are uniquely placed to become the first adopters of the trend, and will be its first beneficiaries as well. Singapore numbers among the world’s most reformist jurisdictions in the finance sectors, and plans to double down on its fintech success. The Monetary Authority of Singapore (MAS) recently published its Industry Transformation Map (ITM) plan, which encourages the introduction of blockchain platforms. They also announced new regulations for ICOs that define which conditions these projects need to fulfill before being considered securities. Singapore’s informed, deliberate rules have driven a new investment boom in Singaporean blockchain businesses such as the existing Kyber Network as well as SGPay, which is set to launch in 2018.

SGPay Looks Set To Dominate

SGPay is an e-wallet solution aimed at the Asian market looking to capitalize on the momentum already present in the space. The wallet is capable of handling payments with fiat and cryptocurrency alike, bridging the gap that still exist today between these two types of money. Users will be able to store whatever currencies they own in the wallet and use them for everyday purchases, creating a powerful outlet for a community who are anxious about the fungibility of their coins. The integrations the team is seeking in traditional verticals as well such as transport and insurance to name a few with their wallet makes their project more promising than competing solutions. It brings it closer in step with ‘full-featured’ digital wallets such as AliPay in China.


The company’s upcoming ICO (or referred to by the team as TGE – Token Generation Event) looks to be one of this year’s most popular, with a formidable team backing up the project, clear signals from the government that such solutions are welcome, and thoughtfully-planned funding limits. With a goal of just US$4.8 million, the company’s realistic expectations are an encouraging sign for investors who are looking for responsible leadership and small market cap plays.

SGPay is just one of many projects in the region taking advantage of the relative youth of Blockchain. As these projects fly past milestones and gain rewarding partnerships, the wheels of change and evolution will ultimately begin to spin more rapidly.

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