Blockchain Remittances Have A New Champion In ZED Platform
In the film Pulp Fiction, on-the-lam boxer Bruce Willis tells his girlfriend that his mysterious new Chopper once belonged to Zed. She is puzzled. “Who’s Zed?” Willis tells her: “Zed’s dead, baby. Zed’s dead.”
The film Zed may be dead, but ZipZap founder and CEO Alan Safahi has a concept that’s very much alive. He’s launching the ZED network, described as an integrated global payments platform based on the blockchain.
The current remittance market is fragmented, with Western Union and the three other largest money transfer operators (MTO) accounting for approximately 25 percent of global remittance volumes. The remaining 75 percent of remittance transactions are processed by thousands of small to mid-size MTOs, which are hampered in their ability to scale due to technology constraints including resources and latency, illiquidity, and banks’ increasing reluctance to service smaller MTOs because of compliance overheads. This lack of competition and inability to challenge the large MTOs is directly responsible, Safahi claims, for the cost of remittances remaining at around eight percent.
ZED’s blockchain technology will address these imbalances and inequities in the market. Executed over Stellar to a network of sending and receiving MTOs in multiple worldwide corridors, the ZED platform offers a single point of integration for MTOs for the sending and receiving of remittances including a wallet, web app, mobile app, facility to exchange multiple currency pairs, and a back office with a suite of analytics and reporting tools for compliance and monitoring.
Safahi talked with Block Tribune about his plans for ZED.
BLOCK TRIBUNE: You’re putting together a tool that will be used by mid-sized to small money transfer operators?
ALAN SAFAHI: We bundle services together and provide them to money transfer operators. This includes mobile apps, labor apps, AML reporting, KYC monitoring, all of that stuff. It’s the stuff that they all need and can’t afford to build the state of the art solution. So we’ve already built that. I’ve already done it once with my other company, ZipZap. So I’m basically licensing that technology to ZED and providing it to these money transfer operators on a wide level basis basically free of charge.
BLOCK TRIBUNE:So it’s strictly a licensing play, correct? You don’t happen to have a stand-alone platform that people will go to for Zed?
ALAN SAFAHI: No. ZED is not going to sell directly to consumers. It’s a B2B player, so the apps and everything we provide will be white labeled with the money transfer operators’ logo and branding. They have their licensed entity. When you think about SWIFT, that sits between two licensed banks, we’re the same way. We sit between two licensed money transfer operators.
BLOCK TRIBUNE: So will this be sort of invisible to the consumer? They’ll be using whatever money transfer operator they currently use and then this will just be part of it.
ALAN SAFAHI: That’s correct. The challenge is that the consumers don’t need to know how their money transfer operators do business with each other. All they care about is that they are giving money to this money transfer operators, they expect it to be picked up on the other side of the world in matter of few minutes. And what happens in the past is money transfer operators have to have relationship with banks and other MTOs around the world and they have to put deposits on hand so that they can pay against that deposit because obviously the couldn’t wire transfer the deposit every time.
So they put in large sums of money and then against that deposit they instruct their partners to pay out their recipients. So there is sending of the money and the recipient of the money do not have to change their behavior at all. It’s exactly the same thing they do today. It’s just the sausage making that happens in the middle between the two MTOs. That’s where we come in. We want to streamline their process, make it much, much less costly and much faster.
BLOCK TRIBUNE: So the MTOs will have to buy the ZED tokens in order to participate in this ecosystem?
ALAN SAFAHI: Correct. Yes. They do and what happens is as soon as they buy the tokens, they will sell it to the other side. There are the partners they have on the payout side. It could be another MTO. It could be a bank. It could be other partners and that we bring in money, market makers and other. So they would buy it and then immediately within a couple of seconds they sell it so there’s volatility for them.
BLOCK TRIBUNE: What’s the advantage of ZED over other solutions in the space?
ALAN SAFAHI: So for money transfer operators, we are the only company that offers a complete total solution.A lot of them are small to medium size MTOs that may not have the resources to build their own mobile app or web app. Certainly don’t have the resources to build any blockchain type solutions. So we make the process cheaper for them. We make it faster. We give them full suite of products that they basically get at the moment free of charge. There may be some nominal fees in the second year and so forth, but the advantage for them is plenty. At the moment for example, some of these money transfer operators, they can’t even send the wire transfer overseas because they were cut off by the federal union, the banks.
So they have to go to their competitors like MoneyGram, Western Union and they then five or six percent extra and ask them, “Please can we use your platform to send money for our customers?” So this would alleviate the need for the MTOs to go back begging to the big money transfer operators to use their platform.
They don’t even need to use banks. They just buy the ZED coin and send it and sell it as money worldwide. And the benefit for them is on integration, they can get multiple payout partnerships. They don’t have to go one by one and integrate in each partner around the world.
BLOCK TRIBUNE: What do you anticipate being the reaction of Western Union and the larger competitors to this?
ALAN SAFAHI: Well, it’s funny because they already are going into the blockchain space. You may have heard of the partnership announcement between MoneyGram and Western Union with our competitor Ripple. And so that has put a lot of small pressure on our clients and MTOs to do something because their largest competitors are leaving them behind. They’re just going into the blockchain space. They don’t have all the benefits of efficiencies and speed that the broker provides for them.
So that’s one. And the other thing is because we are a platform that sits in the middle, collects a ton of data from both the sender and the receiver, we can also help them down the road with compliance recording and anything else they need, monitoring and recording of the compliance, to the extent that maybe they want to do something that they cannot do on their own.
BLOCK TRIBUNE: Are there any currencies or countries that are outside this system right now? In other words, are there restrictions on transfers to China or Myanmar or someplace like that?
ALAN SAFAHI: Yeah, absolutely.So what we are doing is we are focusing on the largest in the biggest markets. Obviously India, Philippines, China, and others.
They give us access to 40 plus countries.There are some countries like China, South Korea that have regulations against cryptocurrencies. So we’re looking at that and we’ll see to see how that impacts ours because ours is a little different. Every single token that we issue on the ZED network is fully KYC and that’s the part that the government is really concerned about.
None of the competitors that are out there doing this or hope to do this can make the same claim that every single token, every single coin is fully KYC. And we did that because my background as a money transfer operator for a few years but also being in FinTech for 21 years, I know regulations get more and more complex and compliance is not something that gets easier every year. It gets tougher.
So we just assume the worst case scenario, decided to build for that and as a result, we are regulator friendly, we have banking partners that we are bring on board. They’re really relived to know that we do KYC on every single point.
BLOCK TRIBUNE: What are the barriers to growth for you?
ALAN SAFAHI: Well, one barrier to growth is how fast can we bring in additional partnerships on board, the money in and money out. So it’s a matter of how fast can we grow which is why we decided to do this token generation event or as people call it ICOs because we can raise a lot of money at one shot that allows us to capture the market.
You have to have large enough network to be of interest to money transfer operators and at the same time, you have to have a lot of money transfer operators that your partners would be interested in partnering with you And the way to solve that is we have relationship with a lot of these MTOs so that helps. We can get started with that. And then by having a lot of money raised, we can show that we are a serious courier and we expand very quickly, those markets.
Honestly, there is probably over two or three players but there’s the first mobile app in terms of small to medium size MTOs, because once they use our platform, they’re integrating with us. They’re using our currency. There’s no need for them to get any other solution. So we want to capture the market as quickly as we can.
BLOCK TRIBUNE: Tell me about your plans for the ICO and the distribution of the tokens.
ALAN SAFAHI: What we have, 100 billion coins that are being authorized, similar to Ripple and others that are in the space. We are selling 21 billion coins in total public event and now that’s in couple of phases. There’s a presale and there’s a public option. So we sell 10 billion of those coins in the presale and 11 billion in public. Currently just starting the pre-sale. It’s a private presale right now. Talking to some of the larger receive and angel and HR managers and offices and so forth.
Once we get that put of the way, then we would offer discounts to the next level all of it on till we satisfy the full 10 billion coins and then at that time, we going to take a break and make sure that we are live with our products, with clients, with partnerships, so that when we actually do the token generation event and we actually go public, we’re going to be one of the few ICOs that’s actually making money and processing transactions and not just have a white paper.
So it’s an actual product. So we’re licensing the technology from ZipZap, my other company, to give us a two, three year headstart. And then we’re modifying it to fit the white label mode and to be based on a blockchain, all the faucets, and that could take another month or two and then by that time, we should have dozens of partnerships already in place for different countries. And I think that’s the right time to do the public sale.Probably by the end of second quarter some time.
We know our space, we know the money transfer business and we need paying point for the money transfer operators which is banking issues and cash flow issues and technology issues. So that’s all we think about 24/7. We’re only concerned about helping these little guys compete with the big guys, the top four money transfer operators.
I think, on a human level, I’ve been advocating using cryptocurrencies for social good, for impact, because I know there’s 80 billion dollars in remittance fees that are being charged and if you can reduce those by one or two percent, even that could create millions of jobs in those third world countries and it could help drive money to the bottom of the economy in those countries.
Not like foreign aid where it goes to the top of the country and we hope that it would trickle down to the bottom people. No, this is direct injection of cash capital into the bottom of the economy.
So I’ve done a lot of speeches in the past about how increasing GDP of this country is by giving them more money in their pockets relates to more really high, better health care and better water, cleaner water, better food and more job, more education, and so forth.
So all the key indicators go up when people have more money in their pockets so that’s our goal. That’s our mission is to help reduce the fees almost down to zero across the board but we’ll be happy if we can make the whole industry go down to one or two percent at the moment.
We’re not charging any fees but we know that our competitors will continue to charge high fees but we just want to drive the price down so that immigrants that send money, their hard earned cash, they can keep more of their money or they can send more of it to their relatives overseas.