The race for a global payment platform

Society is at its most advanced point. Connectivity is global, at almost real-time. Yet, we face a massive challenge in how we do business, and it all comes down to payments. 

In a competitive world, where getting money should be easy, payments is one of the final hurdles we have yet to overcome. As business becomes more and more global, the world needs a unified payment system, but implementing such an idea is almost impossible, at least with the current status quo. This adverse reality has had a massive impact on the startup world but fortunately, it's startups that is leading the change. 

Launching a startup conveys several challenges, from raising capital to having a minimally viable product. However, if you talk to any CFO, they will likely all agree that having a multi-currency payment system is a dreaded, yet vital, aspect of running a startup. After all, unless you have a very localized target audience, chances are you will have clients worldwide. These customers should, ideally, have the easiest path to paying you, and that’s not always the case. 

There’s also another challenge with having clients from all over the world. Startups, more so than other companies, will likely have to operate 24 hours a day, seven days a week. So, fewer speed bumps mean better operations, but neither is a guarantee in our times. Financial operations, especially on a larger scale, depend on local schedules. 

Granted, we rarely need money the next second. After all, one of the basic rules about running a startup is keeping a keen eye on cash, but there’s an example to be made of recent events. When Silicon Valley Bank collapsed, thousands of startups rushed to find money elsewhere. Many ran into the brutal reality that their financial certainty had to wait some hours, as some banks weren’t operating during the weekend. There’s no denying that Silicon Valley Bank’s collapse was an isolated event but it could happen again, and startups are the most fragile in this scheme. 

The same “days of limbo” apply to everyday operations at a much less dramatic scale. However, this reality still has a high level of frustration. Startups are cash-hungry companies that much rather avoid waiting hours or days for customers’ payments and bank transfers to come through. So, what’s the essential cause for these burdensome worries? In many’s eyes, the current efforts aren’t keeping pace with the changing reality. 

Right now, several international payment platform promise to be the next unifier. Systems such as SWIFT and the duopoly comprised of Visa and Mastercard rule the Western world. As for the East, China has created its set of alternatives, including UnionPay and C1PS. India aims to use its UPI system globally, eventually. However, these systems aren’t unifying at all. Instead, it’s either their way or the highway, which brings forth a vast amount of problems, again highlighted by recent global conflicts. 

The first and most important example is SWIFT (Society for Worldwide Interbank Financial Telecommunication). To most Western countries, it’s a safe, quick system where two entities can easily perform international transactions. Globally, SWIFT has more than 11,000 member banks, and no country has total control of it, not the US nor the European Union, but that doesn’t mean they can’t influence it. 

When Russia invaded Ukraine, pressure from Europe and the United States was clear and fast. Restrictions had to be imposed quickly. Thus, several Russian financial entities were banned from SWIFT. 

The impact was felt all over Europe. Russia was essential for other processes, from energy supply, to being a major player in the interbank market. Startups and small businesses that relied on SWIFT, who were minute players in those tense times, were left with their hands tied. The problem is that political boundaries are more powerful than these systems, and we could face another regional ban of such platforms, in the near future. 

The companies that most need a solution work the hardest to solve it. Think about it from a startup’s perspective. It’s common to have international investors, which translates to many variables: multiple countries, different schedules, and even regulatory aspects. These can slow down a startup’s development or even hinder its expansion, and it was from this perspective that an idea was born. 

NomuPay is a Dublin-based startup that aims to revolutionize our business with its Unified Payments platform with end-to-end solutions for cross-border payments. Its advantage is that it covers other needs and considers even regulatory variables in every transfer. The startup raised $54 million, and with this funding, it hopes to eliminate many of the fragmented payment networks that exist today globally. 

One of the regions with the biggest growth in fintech is Africa. Anyone tackling the payment challenge must focus on many variables, from the lack of a banking account to basic infrastructure. Still, that doesn’t slow down the startup world. Africa had 38 fintech startups in 2019; by 2021, the number increased to 250. 

One example is Grey, which allows locals to receive payments in many international currencies without restrictions or a bank. After landing $2 million from Y-Combinator and other investors, Grey has expanded from Nigeria to Kenya, and hopes to reach every African country soon. 

Therein lies another massive challenge. Once a country or continent has embraced a system, it must match it with other regions. A system such as Pix in Brazil has eliminated the need for cash in most of the massive nation, but unifying it with neighboring countries is still far away. Even the United States is getting in on the action. FedNow is the US Central Bank’s pilot program, and it’s not the only one. There are others, such as Zelle and RTP network, but fascinatingly, only 1% of US payments are done through these platforms. Once they establish themselves in the market, they must find ways to operate seamlessly with big players such as Venmo, which already has 77.7 million users nationwide. 

The geopolitical reality of our times means that it’s likely that we won’t have a unified global payment system, and it doesn’t have to be that way. What we need is a common language. Think of a tool that, instead of forcing companies into using a single platform, offers a bridge between the massive regional payment platforms. It needs to be versatile, creative, and resilient, and that’s the perfect recipe for a startup to work on. 

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