As Bitcoin rises, Paycase CEO revels in potential
Firm offering lower fees aims to disrupt $582-billion global remittance market
Not long ago, Paycase chief executive Joseph Weinberg was getting laughed out of boardrooms with his bold predictions about how Bitcoin will change the world.
In 2014 Weinberg co-founded Paycase, a company that uses Bitcoin to help people transfer money around the world with fees that are 60 to 80 per cent lower than those charged by traditional remittance companies. Back then, Bitcoin was best known as the currency of choice for dark web drug deals and its underlying blockchain technology had yet to become a hot topic in the finance world.
“People think we’re doing some sort of drug trafficking with some currency that no one understands,” Weinberg said. “Over the past eight months, you start seeing this change.”
Weinberg is one of those people, serving as a fintech adviser to the Ontario Securities Commission and travelling the world to talk to government representatives about blockchain in Australia, Papua New Guinea, India and Indonesia. And finally getting a little respect feels good.
“No one talked to us. We were all crazy. We were basically considered entirely nuts,” Weinberg said. “No one cared and now it’s like ‘Wait, these guys have the solution.’”
Bitcoin made it possible for two parties to transfer digital value to each other across borders with no fees and no intermediary. Major corporations and governments are studying uses for the cryptographically secure distributed ledger powering Bitcoin, called the blockchain, ranging from securities settlements to verifying the origins of diamonds.
Weinberg, now 26, remembers buying his first Bitcoin in 2011 as a third-year student at B.C.’s Simon Fraser University. After graduating, he went backpacking in Peru, spending time with an Indigenous community in the Amazon.
“They didn’t have roofs over their heads, they didn’t have water, but they had two things,” Weinberg said. “Mobile phones and satellite dishes.”
Another thing they had, Weinberg said, was a tiny Western Union outlet operating out of a shack, where people abroad could send money back to the community. He started thinking about how much money could be saved if people used mobile phones and satellite dishes to send remittances to each other directly using Bitcoin.
That experience led to the founding of Paycase, which aims to disrupt the US$582 billion global remittance market. Traditional remittance companies generally charge a flat fee regardless of the amount of money sent, which adds up quickly for people in developing countries who depend on money sent home from expatriates.
Canadian residents sent US$4.9 billion abroad in 2016, according to statistics from the World Bank — a significant market, but a relatively small share of the global total.
Manuel Orozco, senior fellow of migration, remittances and development at Washington, D.C.-based think tank the Inter-American Dialogue, said companies like Paycase need to offer more than lower fees to convince people to switch away from the major providers.
“Internet based transfers have proven difficult to enter the remittance market because consumers still prefer the agent based process,” he said. “In order to compete it needs marketing resources, regulatory compliance, financial liquidity to perform payments on real time, and a reliable and experienced staff.”
Many of those criteria have proven a challenge for the Bitcoin network. Payments can take a long time to process, low liquidity in the market can make it difficult to buy and sell it quickly and companies like Paycase have to navigate a patchwork of regulations around the world that aren’t quite sure how to handle a stateless digital currency.
Paycase remains in invite-only beta mode while Weinberg and his staff work on finding solutions to these problems. Weinberg said Paycase plans to open access to the general public in about a month and a half and is working on launching a regulated Canadian Bitcoin exchange by the end of the year to help with Bitcoin’s liquidity issue.
To address the regulatory hurdles, Weinberg applied to join the OSC’s fintech advisory committee, which launched last year. The OSC designed the committee to advise the regulator on a variety of topics related to the intersection of technology and finance, but Weinberg said blockchain tends to dominate the agenda.
“Everyone thinks people in Bitcoin, as the libertarians, believe in no regulation. It’s the opposite,” Weinberg said. “We believe in security and privacy and the ability to ensure you have trust. That’s a big misconception.”