DeFi by Design EP#103: Fintech Mega Goliath on Brand Trust & Consumer Behavior in Web3 w/ Worldpay

Transcript

foreign [Music] by Design where we talk all things blockchain and cryptocurrency while striving to educate Empower and generate what is going on everyone welcome back to the roll up um as I'm sure you guys all know we are normally a defy Degen crypto native audience uh we're still going to be talking about blockchain uh we're still going to be talking about scaling to mass adoption and we are lucky enough to have Mina from World pay on today which is a mega Goliath conglomerate in the web 2 Payment Processing space so they

are absolutely huge and they are a Pioneer when it comes to web 2 payment companies adopting blockchain and thinking about it researching it with an open mind um so I think this is going to be a really fun conversation it's going to be a little bit of a Twist uh than what we normally do so Mina welcome to the channel it's a pleasure to have you on um how you feeling tell us a little bit about yourself and a little bit about world pay yeah absolutely thanks for having me Robbie um good to be here things are going well um I can maybe start with giving some background about what I do at World pay and then introduce to the audience a bit about what the company does so I'm Mina I'm actually based in New York I was based in our London office prior been with a company for

over three and a half years and come from a strategy and Consulting background prior to my time at role pay um so yeah let's get into it so I think the way that you describe the company was grade Mega Goliath I think I'm going to use that on my business card um so we are the world's largest payment processor or an industry lingo we call it a merchant acquirer and so the way to describe what a payment processor does is when you buy something online from a merchant and by Merchant I mean a store and that can be an e-commerce store or a point of sale and a brick and mortar store we are actually the layer that enables that store to accept different types of payments so that could be a card payment an e-wallet bank transfer local payment methods so it's actually a

lot of people don't realize when you're using a debit card or a credit card your bank or VISA and MasterCard they don't have a direct relationship with the merchant that you're buying from so all Merchants around the world use what we call a payment processor so we're the number one player in that we actually support a million Merchants globally we process two trillion dollars of funds globally and within the crypto space specifically we've done 40 billion dollars worth of transactions in and out of the crypto space we operate in 64 countries around the world and we expand that every year um we're very big in the e-commerce space and the point of sale space as

well other than payments we also offer adjacent products like chargeback disbursement products fraud products reporting and Reconciliation so anything and everything in payments anywhere in the world really we can probably help you um we're the leading player in Airlines and travel and proud to stay in the crypto space as well so I'm really you know consider ourselves and my team specifically a leading bridge between traditional Finance Finance or Fiat ecosystems and the crypto system ecosystem or digital asset ecosystem I love it that that's a great intro um I I think it's uh I think it would be helpful to build some context around the

existing architecture of payment processors and how you have installed uh World pay um at this layer kind of like what what are the other uh supporting Frameworks on on either side right because you guys are like this middle layer and you help facilitate transaction volumes between Merchant merchants and and processors and Banks so maybe you could just name drop you know who who are some of the the companies and businesses that you work with on each of those vectors the the merchant services the banks and the payment processors really not question through what a funds flow would look

like in its most simple form and then I'll name drop some of the players or intermediaries that we would work with when you make a card transaction let's use the example of buying a cup of coffee at Starbucks the funds actually have to flow from the bank to what we call schemes and schemes are like Visa Mastercard Discover Etc so that your money as a consumer would actually move from your bank account and your bank would have an integration with this scheme say Visa so the money's going from your bank to visas bank and then it would go over to a payment processor like World Pace Bank and then we would do the final or last mile delivery or what we call settlement of those funds to the merchant and that's in its simplest form and this layer both from a technology perspective and from a

contract perspective gets even more complex than that because there could be multiple payment processors the funds could move from multiple Banks and there's you know folks that might be introducing in the middle like they call them isos so there's a lot of intermediaries which creates a really fragmented Tech stock and a really fragmented ecosystem which causes a lot of inefficiencies and the way that money moves today both locally as well as especially for cross-border payments and there's different use cases right so there's payments and how money moves and payments there's also disbursements there's also remittances and so any use case you look at for Chad fire traditional Finance um today there's a lot of room for

improvement even though from a consumer perspective it looks super simple when you tap your card you get your coffee on the back end the merchant is actually paying a ton of intermediaries a chunk of their revenue and they have a big working capital time lag between when you tap your card and they actually get that money and a critical issue and that is today Merchants aren't paid for example over the weekend so cryptocurrency and blockchain Technology operates 24 7 365 you can move value across the internet at all times and we definitely are interested to explore the use cases of that when you think about moving funds from A to B in the most traditional sense and and I think you

hit on two key inefficiencies that are inside this existing architecture in the Fiat world and the traditional Financial world one of them is the fragmentation of liquidity and you mentioned how there's money over here there's money over there it has to move from one bank to another to ultimately land in the Merchants Bank and then the other key inefficiency that you mentioned time to settlement right and a lot of times sometimes settlement is t plus one or t plus two or t plus three if it's over the weekends and blockchains enable instant settlement right because you're interacting directly with the settlement layer so that that was a really helpful background on the existing architecture of traditional Financial systems now could you explain a little bit about how

you guys are thinking about blockchain and crypto and how you're starting to incorporate that into your your Tech stack yeah absolutely I think for anyone that's interested in this space when you read a layer one protocol white paper for example out of Bitcoin one of the first use cases that you hear about or read about is payments payments remittances Financial inclusion and so on so for us in early 2019 is when we decided to make crypto core Focus excuse me vertical for our company and started to formalize things like what's our risk appetite in the space how do we appropriately monitor it what controls will we have to make sure that we can

prevent things like money laundering or sanctions of evasion things like that and hiring talent and expertise so we got our executive team comfortable and this this kind of investment in the space has paid dividends for us where traditionally you know back in the late teens um 2017 1819 we had about two clients and now we're somewhere in the neighborhood of 30. and what we do traditionally for Merchants around the world is naturally enable traditional Fiat payment services for these Merchants so what we do a big part of our Focus area is that what we call Fiat on-ramps and off-ramps so if you're a customer and you're looking to buy Bitcoin or ethereum you can do that on an exchange or an OTC desk or a wallet

using a number of different payment methods so traditionally what we've done in this space is work with Merchants that are selling crypto services or crypto products um and and help give them the ability to accept payments all over the world and the consumer's preferred payment method so that was our number one kind of goal in the space but we also hold a longer term vision for the potential of blockchain Technology as a whole to create really significant efficiencies in payments some of which I've touched on but it's really important for us to separate cryptocurrency as kind of an asset class versus distributed ledgers as a technology and when I talk about Fiat ecosystems I mean current payment rails I mean existing ledgers and who's

owning those ledgers versus what can we do if it's all online with a distributed Ledger Tech as a backbone um so we're focusing on kind of secure and compliant now implementation of that technology I'll give you an example of that so World pay recently launched where the first payment processor to do this an option from Merchants to receive the settlement value I mentioned in stablecoin so specifically usdc we've partnered with circle to enable that and go to market with that so if you're a merchant whether you're a traditional Merchant in retail or travel and Airlines or whether you're a cryptocurrency merchant like a wallet or an OTC desk before you would be receiving settlement

and a menu of currencies that we used to offer like Euros GBP USD but now if you if you desire to have that liquidity and you know measure your sorry monitor your treasury with stablecoin you can receive that directly from world pin and I think um stable coins is definitely a space that I think has become the backbone of what we might know as the modern crypto industry and where we see a lot of web 2 companies play and a lot of regulators give a lot of attention um because you know using Fiat as a liquidity Source or a primary treasury currency especially if you're a crypto native company doesn't really work so I can give you an example so small

exchanges if you are a customer and you place an order on that exchange that exchange because it's a small player doesn't necessarily have the liquidity to fulfill your order so they have to go to a third party liquidity and that third party liquidity provider might want to be paid in stable coins they don't want via so there becomes this Gap in time between when World pay is able to pay our Merchant which is the exchange MNR Merchant needs to send money to the liquidity provider so for us to be able to give that Merchant stable coin um kind of closes a pretty material working capital need for them um and it's tough when you're operating a global crypto exchange and people are paying tens of billions of dollars in

with a card to be able to to manage that so we do get approached by a lot of traditional verticals by people and payments people and treasury people who are thinking about the efficiency of their corporate Treasury and money movements Etc um and they're interested in stable coins because it's the easiest way to dip your toes in the water so to speak there's no tax considerations because there's no appreciation or depreciation of the asset you avoid things like volatility um and there is a saying that you know eventually most of the companies in the world are going to work towards becoming a financial services company and if you look at Merchants that are using things like loyalty programs or their own branded credit card programs that's gone

up a lot in the past few years and trend is definitely how can we leverage fintech to make our Tech stock more efficient and stable coins is a way to do that but it's also a way for merchants to explore a journey where they can offer their end consumers things like lending or yield which is a lot quicker on blockchains so there's a use case for merchants being more efficient in-house but also giving something really attractive to their end consumers and so World pay is exploring you know as a tech stock how can we make that easier for our customers there's a lot to unpack there and I'm glad you brought stable coins into the loop because that seems to unlock a lot of liquidity that is currently in the

Fiat world and there's crypto companies that want to cross that Chasm and World pay seems like it's one of the main Bridges especially with a partnership with circle um World it seems like it's one of the main Bridges between the Fiat world and the the crypto world meaning stable coins an on-chain liquidity so I think you brought up a very important distinction between cryptocurrencies and blockchain right which is also known as distributed Ledger technology and I'm curious what you see as the appetite for some of the some of the companies that you work with is the appetite more to accept Bitcoin and cryptocurrency as an accepted currency to use for Commerce

and Merchants um products and services they want to accept cryptocurrency or is it more of an adoption in an appetite for blockchain and distributed Ledger technology and it's not so much that Merchants want to include additional uh currencies but more so that they want the efficiency of a distributed Ledger yeah I would say it's definitely the latter um for the merchants that we're in touch with they are looking at you know potential Innovation around how do we as a merchant accept payments and crypto so that's something that we've seen launched in the market in Niche use cases today but at scale you don't really see consumers buying coffee with

cryptocurrency there's an issue there where even though there are efficiencies with instead of t plus one or t plus three or t plus five it takes for example in the case of Bitcoin it takes 10 minutes to approve and settle and clear the transaction and entirely end to end which is way faster than what we do today but also naturally a consumer can't sit at the till and wait for 10 minutes for that transaction to clear they need that to happen in a matter of seconds so for you know low ticket prices uh high volume transactions there's not really a currency that works at scale today but there are companies that are Building Solutions around this where they will clear the transaction and take on the

risk um and then settle to the merchant in in a fiat currency or maybe even stable coins but what we've seen in terms of both merchants and web 2 technology firms as a whole we've seen a lot of interest in crypto cryptocurrencies and like things like defy in the metaverse so I think if we compare it also depends on the time frame that you're talking about right like I think in 2023 we're starting off on a very different footing than we did in 2022 like if you compare things like market cap 2022 we saw 2.2 trillion in the crypto industry and that market cap is sometimes seen as a proxy for like the size of the industry or the influence or success of crypto

and this year we started off the year with less than a trillion right the number of wallets did go up but they went up kind of marginally so what we did was in Q4 of 2022 we launched what we call the FIS um Global Innovation report um and we surveyed 2 000 senior Executives across all types of functions both in financial services and non-financial services things like secretaries of countries and ask them from a broad technology perspective active what are you interested in where are you investing dollars what's holding you back from embracing or investing in topics and of all the technology areas that has about 3 -topics came up in the top five when it came to interest in a

three-year time Horizon so ESG and embedded Finance were two of them but then the other three were defy the metaverse and cryptocurrencies and what was interesting about that report was 98 of the respondents said for example that they want to be involved in the metaverse but less than half are actually investing so they don't think it's going to be a big area but they're not hiring for it just yet they're not investing in it just yet similarly 95 said that they think they'll have some sort of crypto service in the future but they're not investing today so people seem really interested but they're not necessarily willing to put money behind it yet they're paying attention though I think when we surveyed them what was

holding them back was a number of different things and I think these things are what prevents us from seeing scale today the first is lack of ecosystem services to support right there's not really the the tooling that's in place today to manage risk or people feel they don't have the data to make appropriate decisions also the the crypto native companies that are offering services today may not be mature enough or at scale enough to work in an Enterprise capacity um there's also concerns about like in a metaverse who's going to monitor the content that goes up there what are some of the implications for you know consumer Behavior depending on that content um and also in D5 The Experience needs to improve you know I mean I'm sure your

users know what they use defy it's not something that the average person can just access and understand how to navigate easily so I would say from a merchant perspective everyone's exploring everyone's hiring a crypto team or talent in the space everyone's paying attention but especially in light of what's happened in the past kind of 18 months to 24 months from a regulatory perspective from a legal perspective I think folks are hesitant to really go all in at this point in time we won't dive too deep into the regulatory rabbit hole we want to make sure that you are you know in in a good space with the compliance department so we won't we won't investigate that too

much but um I do understand it so it's an impact right because it is it's progressing and it's starting to materialize in the regulatory shape um so it's becoming a little bit more you know I think a little bit more in the public eye how how crypto is received by some of these Regulators they're kind of being forced to to look at it with an open mind and I think that's ultimately healthy um I'm glad that they're not in a very you know very quick rush so I'll comment very quickly on the regulatory so that you don't have to um I uh I you know I I like I like how it's progressing because they seem like they're they're hurrying but they're not rushing they're keeping an open mind and

it's allowing these web 2 companies in these traditional financial services companies to explore but without jumping in right so it's almost like they're they have a toe in the water they're kind of feeling it out but they're not they're not cannonballing head first um into this industry and hiring and and and really diving in and flooding the market with Investments so and almost makes me quite bullish on the ecosystem that they haven't quite deployed capital in in that yet because they're waiting on regulatory approval um and it gives me hope that we might see that in the future once uh the regulatory chains are are Unleashed um those web two companies those traditional Financial Services then

could capitalize on the opportunity of um a still relatively early immature Market um and then and then push it to new heights so I I think um over the last 18 months or so um the regulatory progress It's been it's been slow and steady and I think that's ultimately the right approach so I'm I'm uh keen on seeing that continue um you know Regulators seem to be taking a calmer approach but I will say on regulation is I think most policy makers have come out and said you know there's been critical events in the crypto industry things like the collapse of FTX

um lunan Terra what happened there their massive failures but they didn't seem to have a systemic impact on Financial Services broadly um I think one of the downsides of that is you know folks in the industry have been hoping for some time to get one kind of global standard approach to regulation but it's become clear that that's probably not going to happen an example is the UAE and the EU are in the process of deploying what they're trying to make a fit for purpose regulation with Vara or Micah respectively then you have countries like the UK that have come out and published their Viewpoint from their treasury that there's not going to be a new framework for crypto specifically

they're going to use the existing framework and if they need to come up with some sort of exception or use case they will but they're gonna fit you know digital assets into what is already on paper from a regulatory perspective and in the US you see what's becoming known as regulation by enforcement and there's a lot of judicial action happening in the United States but we haven't seen a real crypto regulatory framework in any state or front federally it's just enforcement right now and um you know people seeing what sticks so I think it's great that there wasn't a broader Fallout like what happened in the in the financial crisis in 2008 um and I do agree that I think Regulators they might be you know trying

to move at a certain Pace but there were some events that probably left some of them feeling like they need to give this a lot of attention but when we see a Divergence and Regulation and different geographies it makes it hard for firms like World pay that operate globally to know how to participate because we can only offer payment services to companies that are licensed so different markets you know regulate different Financial Services differently so payments are regulated a very heavy heavily regulated sector and you know some countries might choose to regulate the spot Market or derivatives Etc but it's you know some markets haven't really come up with the clear guideline on what license you would need as a crypto exchange for

example to offer products and services to consumers in those markets so for us it requires a heavier invest meant to get you know external counsel um you know legal attention to figure out can we operate in this market or not so I think you know with regulation hoping to see you know some more cemented policies so that Global firms know what they can and cannot do and I think the reason that's important is if we're going to see crypto really scale and see Mass adoption my personal view is that's going to come at the hands of players like World Pig and you know large web 2 players that have existing Integrations with millions of merchants

existing contractual relationships who can deploy a solution and when they do it's already scaled so an example of that is you know if you today want to buy crypto you might need to go kyc at uh you know an exchange like coinbase or crypto.com and you may not know how to navigate the UI but if you have a banking app for example and suddenly you wake up and you see there's a buy sell hold crypto option I think the two big things there are one you already trust that service because you trust them with your money today um so you're more likely to probably lean in and buy if you see a feature or a widget on your existing app and two you know rather than each Bank individually have to go and build that

technology and that feature if they have you know Integrations existing Integrations they can leverage those and with you know a web 2 company or a big technology player making that move it already enables a lot of players to offer crypto services at scale and and they already have the brand recognition like you're talking about those users are already onboarded to their local banks or their their Banking online banking applications and it makes it makes so much more sense when it's integrated seamlessly into their existing offering and then it feels native um so that they don't have to onboard somewhere else like if they don't or can't figure out the coinbase UI um a standard like plug-in for

traditional Banks right to buy sell hold crypto I mean it's such a game changer because they already have such a massive audience um we see a lot of crypto companies right now trying to get users they're trying to grow like a tech firm that has a b2c offering and we we're just realizing like like crypto native audience grows when the price goes up those users are not here day in and day out to use these almost infrastructure types of applications because it it's simply it just doesn't have the user base the crypto native uh demographic is it's growing but it's not growing as quickly as uh it could grow if it was tapping into these access channels like existing

payment systems and existing Banks and there's a there's a movement one of the most prominent crypto podcasts is bankless right so I want to switch gears a little bit and talk about like the the current intermediaries that you got that world pay works with on on a daily basis you know though those you know as we call them are are intermediaries and I'm curious if if there's almost like uh I don't know exactly how to how to how to phrase this but one of the main motivations of crypto is to disintermediate and and engage more peer-to-peer economy so do you think there's a world where those Banks adopt crypto and and adopt

blockchain technology to enable a more peer-to-peer economy um do you think they are at risk of being disintermediated do they care what is you know what is your take on kind of like the like be your own bank movement and do you think that that might kind of undercut some of the some of the existing banking Partners in fintech uh companies that that exist today yeah I think it's a great question um I think different people have different points about this what we've seen in payment technology for example is change big changes driven by consumer behaviors and consumer demand so I don't see you know

peer-to-peer payments you know the way that are designed by protocols like Bitcoin going you know taking over our card payments today because consumers are comfortable with card payments because consumers trust card payments because consumers have seen card payments work in the past and the UI is and is customer friendly so I think that once consumers or you know once defy tooling or peer-to-peer payment tooling and DLT becomes more user friendly there might be more of a demand from consumers but I think trust in crypto right now has taken a massive hit with the events in the past 12 to 18 months and that definitely deters progress towards a

future where we are completely thankless right which I don't think in the short or medium term there's any threat to that personally I think if we talk about trust a little bit it's really essential in financial services right where you have these Central authorities who are responsible for safeguarding your funds for transmitting trillions of funds globally so securing and maintaining trust with our consumers for example has always been Mission critical to us and we invest in a bunch of tools people practices to ensure that we can settle transactions to Merchants safely right because today there are ledgers that are owned by Central authorities like World pay like Visa like Banks and they do validate transactions and those

transactions do settle right so sometimes you can you hear in the industry that vzn MasterCard may be the most um you know credible creditors other than the federal government so cryptocurrency is a new innovation and yes it can disrupt the way we choose to transfer value across borders but it has to establish trust with its user base to prove an actual credible Contender to what we offer today and I think if you don't trust crypto it kind of combats all of the improvements and efficient could offer because people that need to build in that space or regulate it or consume or invest in it would be hesitant to lean forward right so when you see scams and fraud and hacks that

doesn't support um the movement to to adopt right to build invest so I feel like we we need to have some sort of barometer to measure this like the state of trust in crypto to inform decision makers of you know how to optimize their crypto strategy but um I think it's it's easy to build I mean sorry it's it's easy to um lose trust but it's really difficult to build right so uh I don't think DLT is any exception to this but what I will say is the jury's still out on whether the industry can tighten controls and have appropriate regulation to limit that and deliver on trust in the future but I think for a web 2 company that actually means we're in a better

position to enable growth because we do have consumer charge we launched the crypto app um or a crypto use case we already have that trust with our consumer and because we are a regulated Financial Services institution you can I think consumers feel more comfortable Merchants feel more comfortable knowing that the products that I'm getting in Fiat today or the assurity that I'm getting in Fiat today will be the same if you know I'm getting a settlement in stable coin for example I think that I hope that answers your question I I it does and I think so too I think the regulated institutions already have the the trust of the consumer and rather than crypto trying to build up that

trust sometimes losing it and even once you lose it it's even more difficult to get it back the financial institutions that already have that trust are in the best position to capitalize on growth in DLT and crypto and and it it probably means incorporating DLT in the back end under the hood with consumers not even realizing that they're using crypto or blockchain but it it benefiting them in terms of capital efficiency and the kinds of financial products that they consume um so I want to I want to switch gears a little bit and talk about D5 because you know D5 has a lot of very cool very exotic but very cool Financial products

that it offers um and right now it doesn't have the user base probably because it doesn't have the trust of of consumers to engage in those financial products but if regulated financial institutions such as World pay such as your bank if they were to incorporate defy under the hood and then offer those financial products as a regulated Financial product part of the product Suite that world pay or your local bank offers it probably has a lot more traction it's probably it probably has a lot more trust and there's a there's a lot more likelihood that it's it's consumed and it's well received by the end consumer so I wanna I'm curious what what excites you most about defy do

you see any financial institutions right now that are starting to incorporate defy uh products into their product Suite um yeah generally what what are your thoughts on D5 what what's new and what's what's exciting you most about D5 of a benefits excite me that I think get everybody's interest things like access to Capital where you otherwise wouldn't have access to Capital things like yields where which don't even compare to what a bank can give you um things like ownership of your own assets throughout that process right you don't need to have an institution that you trust that can turn you off if they

feel you're an illicit actor based on whatever metrics they've determined you know constitutes anal illicit actors so I think those elements make it really exciting yield being the one that keeps kind of a larger fintech players Merchants web to companies excited um just from a Capital Management and a treasury you know approach to to Define I think what I've seen in the industry though is the inherent risks of playing in D5 have kept a lot of players at Bay um the inherent risks coupled with we don't have a clear regulatory framework and if I was just to touch on for World pay for example

um there is this notion generally amongst you know compliance teams legal teams regulatory teams that crypto is used for illicit activity and when you're offering Financial products you know on the backbone of D5 that narrative just perpetuates so I think part of the reason it even took you know exchanges so long to allow consumers to pay with things like cards is because the intermediaries that we've talked about they need to be educated they need to be known that things we taught and showed how you can monitor and mitigate risks when it comes to crypto that's why getting those banking partner um relationships took so long because it's a complex ecosystem and everybody

needs to get comfortable with the new innovation so I think um if you look at the early days of the internet though it was the same thing everybody was saying you know the internet's used for nefarious purposes and now everybody uses the internet to do almost everything so any new technology kind of goes through that same scrutiny and Defy is is no exception and I think that you know if we can solve things like you know Regulatory Compliance risk and credit risk and I can touch on what those are so with crypto services from a Regulatory Compliance risk perspective um they like these Services have to be legal for us to offer to our consumers if we're going to ever adopt a D5 product we need to make sure that wherever we're doing it the regulator

has given us View okay we don't have that so you're not seeing you know where in payments it's easier for us to navigate in defy less so because we don't have the experience in D5 I don't think anybody does because it's it's so new um so I think that's from a Regulatory Compliance risk difficult to build from a web 2 perspective credit risk is another really interesting one so as a payment processor if a merchant becomes insolvent and a lot of people don't know this but if they can't deliver the goods that the consumer bought and oftentimes it's World pay and other payment processors that are left having to work with consumers to make them whole and it's visa and MasterCard that pushed that liability down to us so I'll give you an example in covid if you are

a merchant that's you know an airline or a travel agency and a consumer buys a flight or an experience and in Kobe you can't offer that that consumer has the right to file a chargeback and in a lot of those scenarios we had exposure to you know make that consumer whole so similarly if we're going to offer a financial services product like crypto um if you're in exchange and you get hacked and the consumer had purchased crypto from you like World pay would be responsible to to make you whole so I think in defy it's really tricky for us to play because there's so much risk from a credit you know exposure perspective um it's an exciting product and I think it just needs more time for people to get educated ramped up on it and figure

out how to you know have controls in place to mitigate some of those risks yeah I mean those are some of the the concerns that we talk about on a daily basis talking to crypto projects and D5 tooling uh projects you know they they have not they have not gotten that level of maturity and security um that is necessary to incorporate into an existing Financial product Suite um I think we're getting there you know every day people are building even during the bear markets people continue to build uh sophisticated Financial products and and security is Paramount um and I think D5 Builders are aware of uh the adoption curve that requires

security um and the other the other thing I want to I want to kind of break into is um you know my my inclination is that there becomes robust enough security measures um around defy tooling and my products um that they do end up uh in the regulator's point of view secure enough to offer to end consumers um and in that in in that same thread like you know let's say that let's say that you know it is secure um it is adopted and there's a

regulatory framework you guys have you know The Regulators approval to incorporate some of these tools I'm curious how that looks like I'm curious about the question of a private blockchain versus a public blockchain because when we when we talk about D5 you know the key there is decentralization and there's JP Morgan developing their DLT stack there's other other you know Visa other payment processors immersion Services developing uh their own permission to blockchains um and it may it may seem decentralized because it's on it it's on a distributed Ledger but it doesn't take decentralization in the liquidity uh

providers um or you know it it is more decentralized than just one institution but not as decentralized as an entire peer-to-peer economy so I'm curious in your in your point of view and if you know you can speak to World pays uh position or approach to crypto and and DLT are you guys looking at incorporating these products on a permissioned blockchain or a public blockchain such as ethereum um and if it is a public blockchain I'm curious what blockchains have caught your eye um and what might be the settle layer that traditional financial institutions use to settle their transactions

yeah that's a great question I think it's one that's a bit ahead of its times um world paid today doesn't hold any crypto on its balance sheets so we don't interact directly with any protocols ethereum Bitcoin even stable coins we we go to market with Partners who you know leverage blockchain technology on our behalf so I think a lot of web 2 firms haven't gotten to the point where they're comfortable actually including this as an asset class that they're holding on their balance sheet and knowing how to account for things like tax implications and how that works across different borders so what's happening today is if you're going to be offering a product if it's a financial services product if it's a payment

product if it's on a permission blockchain or not you're not doing it on your own you're doing it with a partner right um the way that I see this going is I feel that it's going to be important for any web to firm a technology firm or a payment firm or a bank to have controls in place to be able to approve and deny and gate keep essentially to be able to be adherent to current regulation when specific regulation I'm talking about is ensuring that money laundering isn't happening and ensuring that sanctioned screening is being is being done because Financial Services firms can get really heavily fined or suffer suffer deep you know reputational losses if they don't

so if you're offering a D5 product and an illicit actor or somebody that's deemed an illicit actor is participating in that and you don't have the controls in place on your blockchain to check or sanction the screen who are the individuals that were offering these services to if you don't have a kyc tool to do that um on an unpermissioned blockchain for example then you are exposing yourself to a lot of liability um and because like a JPMorgan for example crypto might be a small percentage of their overall balance sheet it's just not going to be worth the risk why would we risk our reputation with our regulator why would we risk the services and the revenue that we're generating from our core Suite of products to be able to offer this service where we don't feel comfortable with the controls and being

able to speak to regulators and saying like Hey we're actually able to do this on this or that blockchain so I think the risk is just way too high now and juries out on how that's gonna how that's gonna play um for World pay we're not doing it so I can't really comment um but I do think like companies like fire blocks are making it really easy for firms to feel comfortable at least dipping their toes in the water because they've created a product that can ensure sanctioned screening is done before the funds are transmitted on the blockchain so um they've done really well um scaling that product so I think we're gonna have to wait to see how this all plays out I think it's going to depend on a different Market different markets

are going to be more more forward-leaning towards things like open networks than not but in this space I imagine it would be you know developers and Builders ground up that are doing a public service so to speak in building a product that they think can can scale without a web 2 player's support I I think like all things See Fire more likely to come from private private players than big Banks right now yeah that there's a compelling um use case right now for what's known as account abstraction in in defy and

the the ethos of of ethereum and a lot of public blockchains is censorship resistance and in order to prevent money laundering you have to censor money laundering transactions so you know the there is uh some some give and take between uh the censorship resistance and the compliance with regulation um the the reason I bring up account abstraction is because that censorship resistance takes place at the protocol level it's only on the blockchain before you end up putting something on the blockchain like at the fire blocks level you know that that is very easily gate kept and can be kyc'd um and that is the account abstraction

that is that is kind of taking place right now so it's a pretty buzzwordy narrative that's kind of that's kind of capturing a lot of the crypto native space right now um it's it's taking the shape of um the inclusion into the web 2 space and the traditional Financial space By by gatekeeping the order um and then letting any anything that does get past that gate actually settle on the on the Chain um you can keep the chain censorship resistant but then also gatekeep what ends up on the Chain um so that that's something that I I personally think is going to unlock a lot of value and a lot of opportunities

between collaboration in the web 2 and the web 3 fi like internet of value um because if we can get account abstraction and that is kind of the missing piece um to let financial institutions and web two players um kind of open Pandora's Box as to what happens on chain I think there's there's a lot of opportunities because um no one wants to see money laundering you know like no one wants to elicit transactions not even D5 djends want to let that happen like there there is motivation to stop illicit activity um but there's also motivation to prevent um centralized uh sensor censorship um and kind of stifle people and and uh

oppress people's financial services so I think both are very Valiant uh efforts and hopefully there's there's some increase in there's some increase in focus on the tools that end up uh kind of achieving both of those goals on the front end um letting people kyc and gate keep those those transactions and then on the back end um keeping it censorship resistant and making sure that um those financial tools are open to everybody um so that no group is oppressed um with with respect to transactions that do go on the blockchain um yeah so hopefully soon you know I think it is still work in progress It's a little bit too early to tell but

hopefully soon we're able to to cross uh kind of cross that that Chasm and uh unite those two fronts that you know kind of very concretely differentiates the financial ecosystem today in Fiat and what a lot of builders in crypto are hoping to create in an economy where transactions do occur on the internet I think I lost you for a second oh I'm still here everything okay yeah my screen went black sorry I was saying um

yeah so a lot of what the builders are trying to create in a DLT world and I think the the difficulty is today if you want to participate in the financial ecosystem and pay for things online you need to go to a bank they need to kycu they collect a ton of details on who you are and then they monitor all of your transactions they create thresholds around which what is considered an appropriate transaction based on how much you're spending every month who you're sending money to et cetera and they profile you and then they're able to create thresholds with which if you're over or below or if you're sending money to a player that you normally don't they're able to identify that and they're able to ask questions

and then if they're not comfortable with your answers then they do have the right to freeze your assets right so that's the world we live in today where we you know trust these Central authorities with ownership of our funds um you know and their situations where we can't even get money out of our bank sometimes depending on the economy and and what's happening things like Bank runs um and it's very different in the digital asset ecosystem where you can spin up a digital wallet it it's pseudonymous you know it's just a string of letters and numbers in that scenario there is no kyc you have access to a blockchain where you can you know earn earn cryptocurrency send cryptocurrency use it in whatever way you want where there is opportunities for you to spend

it you can and there's no Bank in charge of freezing your money if they think that you're sending it to an illicit actor or they think that you're you know purchasing Goods that could be illegal so account abstraction if it's able to solve for this where you know people can leverage the benefits of transferring value on an internet native currency but then still you know allow for BSA standards or Bank secrecy act standards to be met and those are the ones that you know ensure that Financial Services firms payment companies are adhering to sanctions law are adhering to money laundering rules and you know you know billions are spent from from all these Banks and payment companies to have compliance teams in-house to adhere

to these roles right whether or not they're effective is a whole other story but that's the world we live in today and these are the two philosophies that keep crypto and Fiat very separate because there's different rules and there's different standards of ownership and there's different protocols that dictate how you can send money and who can send money and when can they send money and so I agree with you in the future if we can solve for a way to bring those two together then we're then we're at a place where you know we can see crypto use for payments that scale potentially um but we're definitely not there today and I think you know I've seen use cases where if a merchant is trying to enable a pay by crypto solution and a consumer is paying with cryptocurrency and what

markets are we actually able to do that legally because if that consumer is paying over a certain amount for example say 2 000 Euros then there is a requirement for that Merchant to check who the consumer is and if they're paying with a crypto wallet if it's a centralized exchange wallet then it you know they've already been kyc and there's a way to pull that data if it's a defy wallet then there is no way to identify that consumer so maybe they can make payments online to that Merchant below a certain value but not above and so you know when you're thinking about the total addressable Market size for a product like this it becomes really difficult to build one because one you don't know if the partners that you're going to use to go to market with are going to be maybe you know hit with the

wells notice or they're going to be irreputable or the the product that they're building is going to be regulated out or you know new regulation around crypto means that you've built this product and the merchant has enabled this product but you know we can't have appropriate kyc tooling so if there's a future where we can kind of find a way to merge the political thesis Behind These two worlds I think that could be a very interesting space to live in yeah I think so too and I I hope I hope we find that Common Ground between those two philosophies because I think both of them are I think both of them are are somewhat righteous like both of them are trying to do the right thing it's just a matter of of like the mechanism

um and kind of how they choose to install their philosophy you know like Banks and financial institutions um they protect others because they feel like they have the best capability to protect other people's money and the I mean we can see there is billions of people who Trust Banks with their money because they are in the best position to protect that Capital um and we you know see that censorship resistance throughout the self-custody route and we see how there's a philosophy Brewing of um people who don't want to trust they want to verify that they have ownership of over their own Capital um and I think both of those are totally valid

um so it would be it would be very cool to give both options um and let both of them flourish uh and and they might go in two different directions but I think supporting uh both of those options for consumers ends up giving giving consumers more options um it lets them choose their own path and and hopefully um consumers uh find more valuable and they feel like they're more involved in their own lives and their own finances um I think I think you know that that's kind of the common ground and we're here to educate you know like I think part of the missing piece on both the web 2 side and the web3 side is is education about the other side

um and I'm really glad that we have the opportunity to have this podcast I really really appreciate you coming on and providing the webtoon the traditional Financial perspective because I think it's it's just as important to educate the web 3 uh world and the crypto natives about the web 2 perspective I think that's just as important as vice versa and educating the web 2 world and and the traditional financial institutions about the capital efficiency and the potential of of blockchain Technology um so I I hope through this podcast we're able to educate I certainly was able to learn more about the web 2 perspective um and I hope we have have more opportunities to uh to educate uh both both of these worlds and people learn

from uh listening to this podcast yeah I fully agree it was a great discussion thank you for having me on the show and you've gotta call me back in a few years and you can chat about how it all played out yeah you can chat about world coin and uh and uh how how it's taken over the world or not yeah that would be cool Before I Let You Go we have one question that we ask just about everyone who comes on the podcast um and it might be a mute question because you probably have the opportunity to to connect with almost everyone out there in the in the financial services world but the question is this um if you were to uh to explain World pay and your perspective um to anyone in the world or anyone that

has ever lived you know it could be someone dead it could be someone alive like who would you want to explain World pay what you what you do who would you want to explain that to and why wow that's a big question a lot of writing on my answer here I feel um no wrong answers yeah if I were to to choose one slain World pay two other than my parents who always ask England no matter how many times I tell them they don't understand um it's the same in the web 3 world yeah honestly in this space probably somebody that is trying to build solutions for payments at skill

um anyone that's building a Dap or like a layer one protocol I would love to tell them what we do so that they can build it in a way where we can use it so that their solution can actually reach the millions of merchants that that we already touch um because I do believe that there's there's a lot of good we can do with the technology there's a lot of issues there's a lot of costs there's a lot of you know speed concerns money's not moving and getting to where it needs to be on time and I'm really passionate about improving that um and so if there's anyone that's building a solution I would love to chat with them and tell them what we do so we can ground up build it in a way where we can scale great answer yeah and I'm sure there's

there's plenty of higher ones layer twos daps and builders that would love to love to connect and and talk about it cool well it was a pleasure thank you for coming on I really do appreciate you taking the time and having the podcast yeah great to be here thanks Robbie until next time let's do it again cheers bye