In this article, Pascal Kurzawa shares his journey into digital marketing and the fintech industry and how his company – Wallet Engine – provides cross-border transactions for clients.
Here’s the interview outline:
- Q: How did you fall in love with Gregor pitch? Who is Gregor, and what did he pitch you?
- Q: What is the problem that the wallet engine is solving?
- Q: you said that you don’t have to go through a merchant account? Is that true?
- Q: How do you handle exchange rates?
- Q: What countries are going to be available?
- Q: The fees that users pay, how does that work?
- Q: How long does it take between a transfer until someone can take the money out between the trends?
- Q: What are the prohibitions from doing it this way in the past? Why was it never done before by other banks?
- Q: How is the wallet engine solving that problem?
- Q: If there is 100$ sitting in there, will there be any interest or anything like that? or how does that work?
- Q: Could you talk briefly about Verso and how that’s complementary?
- Q: What are some other examples of relationships that VersoVerso will be establishing or has established?
- Q: What’s the next plan for the wallet app in the next three or six months in 2022?
- Q: You have received the funds already, right?
Q: How did you fall in love with Gregor pitch? Who is Gregor, and what did he pitch you?
Gregor is our CEO and the founding father of the world dungeon. He has been in the fintech space for a long time. He’s been a fintech entrepreneur, I think, since 2014. He launched the first donation gifting app in the Philippines back then, which was already focused on the content creator economy.
He always saw that this kind of tipping features donations is something that will be very, very big in the future. He was pitching, and I felt like there’s this passion, and there’s this thing also because he is very knowledgeable in this field since he has been operating in the field already for quite a long time.
It seems like it is the right observation and the right calling that he’s following and that we are following because just today, actually, I saw the news, and I saw now that even TikTok is starting to embed direct donations and payments into their user journey, so we feel like we are on the right track here, but it’s still a long, long way to go.
Q: What is the problem that the wallet engine is solving?
The main problem that we saw in the market is when we look at cross-border small value payments; there are in most jurisdictions or in general, they’re just not possible as of now.
For example, if you just want to send one dollar to a content creator in the Philippines, how are you going to do this? The person probably doesn’t have a PayPal account.
Even if you use PayPal, it will cost too much to justify a donation of 10 cents or 30 cents because you will pay 50 cents in fees. It’s just it just doesn’t make sense.
When it comes to the content creation app and the payment infrastructure itself, most of the payment infrastructure is looking outside stripe right now.
They have been designed for e-commerce payments, and this is also why the current solutions for the ones for the knights like clubhouse and TikTok, they’re good first approaches, but they’re not sustainable in the long term because since they implemented stripe.
Stripe basically sends the money from a user to a merchant account from a version account to another user, so this is already quite complicated, and in there, there is already a fixed fee, and the percentage fee is involved, which really doesn’t enable the use case of small value tipping.
The second problem that we saw besides that is that the payment infrastructure is designed for e-commerce in most of the wallets that are not interoperable as of now. It means you cannot use paper to drop up your n26 account in Germany.
You cannot use it to top up your graph account. So all of these wallets, they’re kind of not interoperable with each other.
The last problem is that even the remittance companies, such as transferwise, uniquely don’t cater for small value transfers.
If I type in to send one dollar to the Philippines from Singapore, it’s thought admittedly it’s not available for transferwise.
It costs two dollars in fees, so this use case is very much not enabled by these small value payments, which is why we came up with the idea of a wallet engine where we basically set up the core infrastructure so that any app through an API that can integrate us and we become a kind of a valid service provider.
Q: you said that you don’t have to go through a merchant account? Is that true?
Exactly, it is true. Basically, the wallet engine works in a way that you could think of it. Let’s say there’s an app in Singapore, and this app is integrative with the wallet engine. The app user can create their own wallets.
They can customize it. They can integrate directly into their user journey and can adjust the colors and everything. They could just have the wallet button right in there, and basically, this is more efficient than a stripe.
Because all of the money that goes into the wallets are stored in one big bank account, it means if we send 10 cents to another person, we just basically redistribute the ownership of the e-money in our account. And when it goes cross-border, it will work.
The 10 cents actually never leave. If somebody sends 10 cents from Singapore to the Philippines, this money never leaves Singapore.
Actually, we just take it out of the float account in the Philippines and put it into the person’s wallet, so that’s why this system is very efficient and much cheaper than strike points.
Q: How do you handle exchange rates?
We reapply basically direct exchange rates to this to these cross-border transfers. The exchange could be different for each country, and it’s a challenging factor, and we will adjust over time.
Q: What countries are going to be available?
The first country that’s available is Singapore. We are launching there with a gig economy app, and the second country we’re focusing on is the Philippines right now. We already have some business, some partnerships, and customers there, which makes it a very great use case already.
We are really much recovering from Singapore and expanding slowly to the Philippines, Indonesia, Malaysia, Thailand, and Vietnam.
Q: The fees that users pay, how does that work?
One of our key value propositions is that the apps can basically decide and customize their own tree structure. If the user uses a credit card, then what we cannot do is we cannot evade the top-up costs. There will be 2% pros being worth it, but the app itself can now decide if they want to pass it on to the user and do they want to pay it for them. That’s all up to them.
When it comes to the transfers within their ecosystem, they could say we charge 0% or 2%. Whatever makes the most sense for the business use case.
Q: How long does it take between a transfer until someone can take the money out between the trends?
Yes, you can take it out. For instance, the Singapore off-ramp pays now, and you could also use your bank account.
What we experience is that bank transfers are quite fast, and they will be grossed within one day, but a few of them they could also take around two days until your money comes into your bank account.
Q: What are the prohibitions from doing it this way in the past? Why was it never done before by other banks?
I think the best answer for this is that it is very, very hard to enable this use case because as soon as you as a content creator app want to make the small value payments with these hosted accounts, you need to become a financial institution that is what we’re seeing.
It also took massive investments too, and they needed to gain the necessary licenses, so there’s already a big-time constraint here.
It takes time to get the license for each country. As for Paypal to grab the right e-money license, it took two years for a Singapore license, while we need to take it for every country separately, so that’s already a huge barrier.
Q: How is the wallet engine solving that problem?
Basically, what we take away is we take over all of the pain that the apps would need to endure, which is becoming a regulated company.
So we are regulated in Singapore and are currently in the process of getting our e-money license finalized, which means that we are actually custodial of E-money. We are regulated by the monetary authority of Singapore.
What is a very strong value proposition here is many apps told me is that integrating with payment gateways for them is just a big pay. Because again, they need to do it in every country.
Again there are different payment gateways everywhere, so every app that I’m talking about is known for the fact that it’s a big hassle.
But we have our wallets, and we give them access to the wallets, and all the payment gates are already integrated into our wallets. They’re all already there, and you do not need to be worried about this anymore.
Q: If there is 100$ sitting in there, will there be any interest or anything like that? or how does that work?
Since I’m deeply involved in the fintech scene, I am looking at other examples. Some very exciting companies, and us as well, and in Germany. What we’re considering right now is the next stage for us. It would be very great if we could have direct agreements with merchants.
So it basically has more and more payout channels so that you can just use your wallets. We actually have the QR code feature already, but you can now have a partnership with Adidas.
You can go there, buy a pair of shoes, and through this agreement, they are also on board as a merchant from wallet engine, so we can basically cut the processing fees by a lot and then offer maybe a five percent template up to ten percent cash back. So you buy a pair of shoes, and ten cashback goes back into your wallet.
This would be a very exciting case for sure, and the yield generator or the kind of offering interest. It’s also a very exciting thing; I mean, I also see many different companies; I think n26 in Germany also has this, but it’s a more difficult feature to implement because as soon as you have this feature, you basically need to have a real banking license.
Q: Could you talk briefly about Verso and how that’s complementary?
It’s actually quite funny because, I mean, originally, when we founded the wallet engine, we always thought about what it would be needed to be even more than just enabling the waters and the micropayments.
We are now thinking about well as becoming a gateway to embedded finance and also including micro insurances and loan products directly into any wallet experience.
We always had in mind that this would be much later on our road map but then beginning of this year, with all this crypto rush, we started looking more into it, and this is basically how VersoVerso was born and what VersoVerso is doing is we have right now our own token.
We launched the token and several exchanges, and we are building the product right now that basically enables any wallet (as of now, it’s a wallet engine, but in the future, it should be any wallet) to connect with VersoVerso and through VersoVerso, they can directly embed insurance products, micro insurance, microloans and all of these kinds of microfinance products into the app experience.
Additionally, we can directly embed even big economy insurance or cyber risk insurance into the product suite of the wallet engine, so this is another revenue generator for the app.
Q: What are some other examples of relationships that VersoVerso will be establishing or has established?
There are different use cases here, for sure again. I mean what we also see would be very great. We already announced the partnership with a dash which is a very big cryptocurrency in a very big crypto wallet.
So even basically connecting the c5 world to c4 insurance provider with the d5 wallets and basically, these people, which are a lot of users actually where can also directly access insurance products through the d5 wallet.
But, also beyond this, as I mentioned, what’s a very good use case for the Philippines that say it would be microloans or just like a fifty dollar instant loan that would also be handed directly to VersoVerso and a partner financial institution sitting on the other side.
It’s a very seamless process, and also, some of the insurance products that we’ve checked cost you on a monthly basis. They cost you just a few cents, maybe 30 cents per month, and then you’re basically in short for this use case.
There are many more when it comes. Even though we can offer travel insurance and flight delay insurance, that’s also quite cheap, and they are just many use cases.
Q: What’s the next plan for the wallet app in the next three or six months in 2022?
We are right now in the face where we aim to launch more apps in Singapore to prove the use case even more. We also set up operations in the Philippines and live transactions in the Philippines, so we are very much right now in the face where we want to grow the wallets that we are operating.
The active wallets on our system, and I think the main goal for the next six months, would be enabling the payments or second country, which is the Philippines, on a larger scale.
Q: You have received the funds already, right?
Yeah exactly. So far, we raised this for some of the investors in the bigger rounds. We raised a siege round which was mainly family and friends ( raised 1.4 million US dollars).
Then we raised another 1 million dollars to vessel finance basically, and vessel finance was received by some very great investors in the blockchain industry. For instance, at our launch, they directly invested in us, which is one of the top blockchains out there.
We are currently raising another round which is pre-serious, supported by our lead investor, sean O’Sullivan ventures sosv, because we also went towards the beginning of the year we went through the mox program with boiler engine and etc.