Bradley Riss is the Chief Commercial Officer at Checkout.com. One of the world's biggest fintechs, Checkout.com's mission is to enable businesses and their communities to thrive in the digital economy. With over 2,000 employees and 19 offices around the world, its flexible payments platform and local expertise power some of the world’s most innovative companies and established global brands. At its most recent fundraising round in January 2022, Checkout.com was valued at $40bn, making it the UK’s most valuable venture-backed business. He plays a key role in scaling the company’s crypto offerings, enabling Checkout.com to power the world’s largest exchanges, on-ramps, token platforms, and wallets. Bradley has 15 years of experience working with some of the world's largest brands to deliver payment solutions across the world. Prior to joining Checkout.com, he held positions with Adyen, DigitalRiver, and Ingenico, based across the US, Europe, and Asia Pacific.
He is currently based in Miami and holds an MA in Business Management from The University of Edinburgh.
It's fair to say that businesses are still uncertain about how cryptocurrencies can benefit their bottom line and/or enhance customer experience. With many consumers still wary of anything blockchain-related, and markets well into our periodic "crypto winter" season, it's understandable that business leaders might wonder what they can expect from digital assets. Well, the good news is we are seeing the move from speculation to utility, and nowhere more is this obvious than with the emergence and meteoric rise of stablecoins.
Stablecoins are a digital version of a fiat-denominated counterpart traded on the blockchain with most pegged to the USD. Not all stablecoins are created equal, and the likes of DAI and USDT have proven robust in their own right. However, for the sake of this piece, I will be focusing on those provably (via audit) backed 1:1 - so for every USDC, USDP, GUSD, etc. minted, there is a corresponding $1 amount held in cash and short-dated US treasuries. This means their value remains stable in line with the central bank-issued currencies we know and love vs. the typically less predictable crypto native assets like BTC, ETH and others. All this said the market cap of the top 10 stablecoins reached a combined value of over US$160 billion earlier this year - but why the growth and what can they do that’s better than what came before?
Alongside providing a historically, widely-accepted store of value, stablecoins offer huge infrastructural improvements compared to the traditional banking system, especially in today's globalized marketplace. With ever-increasing numbers of payment processors and merchants operating internationally, the global payment ecosystem remains highly fragmented. This leads to inefficiency, delays, unreliability, and high costs. Merchants and consumers alike are rarely certain exactly when payments will be settled or orders will be fulfilled. In an always-on, globalized business environment, this is a major obstacle to seamless transactions, from both a merchant and consumer point of view.
By contrast, stablecoin settlement happens 24/7/365 in real-time and can be conducted with near zero cost and with full auditable visibility "on chain." No longer dependent on the patchwork of international banking holidays, weekends, and timezones, payments happen almost instantaneously. That means, if you're a retailer, you can send the customer their goods straight away, and if you're a financial institution, you can deploy those funds no matter where the transaction occurs. If you have a broad ecosystem (think most gig economy companies or marketplaces), you can better move value across your environment with fewer barriers. In other words, more value can reach more participants more quickly.
A path to financial empowerment
Stablecoins also solve a real problem for freelancers working via the likes of Fivrr, Freelancer.com, or Upwork. Typically, a company in a developed market contracts a worker in an emerging arena via these platforms, benefitting from comparatively lower costs from outsourcing. Typically, these intermediary platforms hold the agreed fee (probably in USD) in escrow until the job is finished. Then, once the work is done, the gig worker has to pay a conversion fee, a wire fee, and wait several days for their money - if they did not fat-finger any of their details of course. If the platform made payments in stablecoin, the freelancer could simply give the client/platform their public wallet address to receive USDC, costing virtually nothing to send and settling in seconds. There are benefits for everyone: the freelancer receives a greater dollar amount for the same work, while the platform lowers its fees and creates greater customer loyalty by offering a superior customer experience. Plus, in many places in the world where local currencies are experiencing inflation or devaluation against the dollar, it's attractive for workers to keep their money in USD (or a USD-pegged stablecoin) in order to preserve its value.
In this sense, stablecoins are a route to financial empowerment and self-determination for those who are most disadvantaged globally. Ultimately, this is because stablecoin settlement solves many of the inefficiencies in the traditional banking system, making fund transfers faster, accessible, secure, and low-cost.
Instant remittances made easy
Moving onto another emerging use case, take MoneyGram for example, which recently launched USDC support settled on the Stellar blockchain. Typically, the way that P2P payments companies work is by establishing and maintaining a network of internationally localized liquidity - a large sunk cost of setting up these local accounts and currency pools, with ongoing operational overheads. The promise to their users is "instant remittances" but in a world where the banking infrastructure does not itself support this, this was the best alternative – rebalance local balances after sending payments on local networks that can, in some cases, support instant or failing that, same-day settlement. If, however, these companies can use a centralized accounting structure and send payments on chain, they can vastly reduce costs, streamline operations and provide a faster and cheaper settlement. A win-win-win-win, if you will.
Money remitters are perhaps the most obvious beneficiary of this emerging technology, but any company with customers, employees, partners, or vendors they pay internationally would benefit from this approach.
There remain barriers in the form of regulatory clarity and general adoption, but the underlying technology performs, and in a meritocratic world, the best solution usually wins. Adoption curves for new technology often look like what we see in both consumer and merchant worlds today when it comes to crypto, and the noises from regulators in free markets are increasingly positive. For me, this feels like one of those "right side of history" moments where the early adopters will be the first beneficiaries.
I've worked in payments for 13 years and I will pay credit where it's due. There are some excellent domestic systems—UPI in India and PIX in Brazil spring to mind—which can also deliver low-cost, real-time payments and the card networks work very well for many retail payment situations. However, we are a ways away from seeing something optimized across jurisdictions without the use of blockchain. This leads to an important macro point: the future is not one where the old cannot exist, convergence is a more logical path. This is already the case with the "last mile" use of credit/debit cards to pull from crypto balances held at exchanges, or SWIFT's recent move to test blockchain as a replacement for their existing (and in all fairness, slow and expensive) platform. It is not all or nothing, or us vs. them.
I’ll use as the final point a reiteration of the first–that crypto is moving to the utility phase where answering the question “what problem does this solve?” is the acid test. Stablecoins are showing us the way forward and are likely the future “cryptocurrency” of mass adoption, delivering many of the benefits highlighted back in 2008 with Satoshi’s whitepaper on Bitcoin. Crypto can feel confusing but the value of stablecoins - and how they are already being used by those on the leading edge - is immense. In short, we are solving problems.
All opinions expressed by the writers are solely their current opinions and do not reflect the views of FinancialColumnist.com, TET Events.