Product Management Confabulation
What Product Managers are talking about.
Solana Pay, a decentralized payment protocol by Solana Labs, has integrated its plug-in with Shopify, allowing millions businesses on its platform to use it for payments, TechCrunch was told exclusively.
Solana Pay launched in February 2022 and is built on top of the layer-1 blockchain Solana. USDC, the second largest stablecoin with a market capitalization of $25.9 billion, will be the initial payment option for this integration, Josh Fried, business development and partnerships at Solana Foundation, told TechCrunch.
Going with USDC first wasn’t unintentional. Most merchants probably are probably more willing to accept something so closely tied to the dollar. USDC is also more regulated than, say, many altcoins, and consumers in general are already used to transacting in digital dollars. But the protocol will consider adding cryptocurrencies like SOL and BONK in the future, Fried said.
Shopify accounts for 10% of total U.S. e-commerce and $444 billion worth of global economic activity, according to its website. The Solana ecosystem has over 11.5 million active accounts; Solana Pay has been adopted by big crypto names like Circle and Phantom as well as payment processors like Checkout.com and Citcon.
“Some people argue the killer app for crypto hasn’t arrived, but it has: it’s payments,” Fried said. “[Everyone] should be doubling down on this.”
Credit card processing fees usually cost a business between 1.5% and 3.5% per transaction, but using the Solana Pay option is practically “fee-free,” Fried said. The average cost per transaction on Solana’s blockchain is $0.00025, or fractions of a penny. Of course, Solana has dealt with downtime issues in the past, which in itself has a cost. But the blockchain reported 100% uptime in Q2, so things are getting better. It’s also worth noting that Shopify also entered the credit card space in July by launching its own business credit card for merchants.
Image Credits: Solana Pay (opens in a new window)
The integration can also help merchants set up loyalty programs with “little development,” Fried said. These reward systems can be as simple as launching NFT loyalty tokens that would transpire when a consumer checks out and if they return to buy something again and use Solana Pay, the store can give them a discount.
A few crypto-focused teams and brands like Helius, Mad Lads and MonkeDAO have also agreed to integrate Solana Pay on their Shopify storefronts, Fried shared. Any Solana-centric crypto wallet that has integrated with Solana Pay like Phantom, Solflare and Glow, will be able to connect to the plug-in.
Shopify isn’t a stranger to crypto payment options, either. In February, it launched a number of blockchain-enabled commerce tools and features to help merchants build tokengating applications. Shopify already integrates with other payment applications like Coinbase Commerce, Strike, Crypto.com and BitPay.
In general, Solana Labs sees its blockchain as “perfectly suited for payments,” Fried said. There’s no intermediaries, bank fees, chargebacks and holding times, he said. “You need speed at the point of sale for merchant payments. No one wants to sit on a website to wait for wallet transactions. Similarly in a point of sale in a store, can you imagine waiting three minutes for your payment to go through? No one wants to do that.”
Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. There was plenty going on as usual — with fintech investors sounding off, payments companies seeing big stock moves and much more.
One other note, you can find Mary Ann on TechCrunch’s Equity podcast, which she co-hosts every Friday with Alex Wilhelm, including this episode that came out Friday.
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This past week, we saw two global payments companies release earnings with wildly different results. Uruguayan fintech company dLocal saw its stock surge by over 30% on Wednesday alone on the news that the payments outfit had tapped former Mercado Libre CFO Pedro Arnt as its new co-CEO. Shares closed that day up nearly 32% at $20.45, after climbing as high as $24.22 earlier in the day, giving the company a $6 billion valuation.
That surge was on top of an August 15 spike after the company beat earnings estimates in releasing its second-quarter financials. Impressively, dLocal reported revenue of $161 million, up 59% year-over-year and 17% quarter-over-quarter. The company also saw a large jump in profits, reporting gross profit of $70.8 million in the second quarter of 2023, up 43% year-over-year compared to $49.6 million in the second quarter of 2022 and up 14% compared to $61.8 million in the first quarter of 2023.
Earlier this summer, I caught up with dLocal co-founder Sergio Fogel, who rejoined the company in June as co-president and chief strategy officer, per a Bloomberg report, “as part of a push to help regain investor confidence and stabilize the company’s stock after it tumbled following a probe in Argentina and a short seller attack.” You can read the details of that interview here.
By Friday afternoon, shares were trading at just under $20 and the company’s market cap hovered at $5.8 billion.
Meanwhile, shares of Dutch payments processor Adyen sank “to their lowest level in more than three years” on Friday, as reported by Reuters and others. Shares were trading at $872 as of Friday afternoon, down significantly from a 52-week high of $1,763.80. That was after a 39% drop on Thursday, according to CNBC, after the company “reported worse-than-expected sales and a profit drop in the first half of the year.”
Specifically, Adyen notched revenue of $804.3 million in the first half of 2023, up 21% from a year ago but below analyst estimates. According to CNBC, “Adyen attributed the tepid print to increased hiring, firmer wages and to a shift in its North American customers’ business prioritization from growth to cost savings in the first half of the year.” Revenue growth is slowing. In the first half of 2022, revenues climbed by 37% year-over-year. Despite the not-so-great news, Adyen remains one of Europe’s highly valued fintechs, with a market cap of $27.22 billion euros.
Notably, while Adyen has made a heavy push in North America, dLocal has done the opposite — saying that market is already well-served and instead focusing its efforts on emerging markets such as Latin America and Africa.
Mary Ann conducted a survey of six fintech investors, including Index Ventures’ Mark Goldberg, Upfront Ventures’ Aditi Maliwal, GGV Capital’s Hans Tung, TTV Capital’s Lizzie Guynn, Norwest Venture Partners’ Ed Yip and Acrew Capital’s Lauren Kolodny. One of the more interesting findings is that not everyone is going all in on artificial intelligence (AI). In fact, Tung shared that while he is “most excited” about AI, he also believes the sector is the most overhyped, telling TechCrunch: “It is central to the core business in some companies, and in others, it is simply a supporting character.” There are too many other interesting nuggets to share, so check out the full survey results here.
As reported by Jacquelyn Melinek: “Credit cards payments processor Checkout.com is no longer servicing Binance, the world’s largest crypto exchange, a spokesperson from the exchange told TechCrunch. ‘There is no impact on our services and users can continue to use on-and off-ramps as usual,’ the Binance spokesperson added. London-based Checkout.com, which was valued at $40 billion in January 2022, terminated the relationship earlier this month through a pair of letters, according to a report from Forbes.” More here.
Reporter Sarah Perez covered PayPal’s announcement about its new CEO Alex Chriss, who will take the helm of the company in late September. Prior to joining PayPal, Chriss was a long-time employee at Intuit, working his way up to lead Intuit’s Small Business and Self-Employed Group. He replaces current PayPal CEO Dan Schulman, who will remain as part of the company’s board of directors until its next shareholders meeting in 2024. Meet Alex Chriss.
As reported by Tage Kene-Okafor, Mastercard is plunking down some dough to take a minority stake in the fintech division of MTN Group, Africa’s largest cell phone provider, which it values at $5.2 billion. Both companies are close to signing on the dotted line, and the deal reportedly came about a year after MTN Group began seeking out some investors for the fintech division after it was separated from the company’s main telecom business. Read more.
The Information reported that spend management startup Ramp is raising “several hundred million dollars” at a $5.5 billion valuation in a round led by Thrive Capital. The company last raised in March 2022 — $200 million in equity funding at an $8.1 billion valuation. We expect to have more to share on that front next week. Meanwhile, other spend management players announced new features this week. Brex revealed it has expanded into group events, an unexpected move for a fintech company — but execs say the decision was based after seeing how many off-sites its customers were booking. Mesh Payments announced its own expansion into travel with a built-from-within solution. More on both of those initiatives here.
Bluevine CEO: IPO filing in 18 to 24 months. The company also told TechCrunch via email that it has surpassed over 160,000 active monthly accounts, 500,000 in total customers served, $14 billion in loans delivered and $850 million in checking account deposits. It also said it’s tracking $200 million in 2023 revenue, reflecting 80% year-over-year growth. Bluevine also claims it’s “outpacing the SBA on lending to minority business owners (by ~600% over past 3 years), and indexing 39% higher on minority biz owner bank accounts relative to the % of minorities making up the US adult population.”
Fintech startup Mercury said last week that it is launching a SAFE offering. Via email, the company told TechCrunch: “With VC funding contracting and priced rounds becoming increasingly hard to secure, SAFE agreements are vital tools for bridge round funding. With this new offering, Mercury customers can create, sign, and distribute SAFE investment documents as well as request and track payments for their investment rounds, all through Mercury, for free.” In July, TechCrunch reported on how Mercury has seen a surge in customers in the months after SVB’s implosion.
Spotted on X: Yieldstreet is nearing a deal to buy real estate tech company Cadre. Learn more about Cadre’s growth with some prior TechCrunch coverage.
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Join us at TechCrunch Disrupt 2023 in San Francisco this September as we explore the impact of fintech on our world today. New this year, we will have a whole day dedicated to all things fintech, featuring some of today’s leading fintech figures. Save up to $400 when you buy your pass now through September 18, and save 15% on top of that with promo code INTERCHANGE. Learn more.
Image Credits: Bryce Durbin
Uruguayan fintech company dLocal saw its stock surge by over 30% on Wednesday on the news that the payments outfit had tapped former Mercado Libre CFO Pedro Arnt as its new co-CEO.
Shares closed up nearly 32% at $20.45, after climbing as high as $24.22 earlier in the day, giving the company a $6 billion valuation.
That surge was on top of an August 15 spike after the company beat earnings estimates in releasing its second-quarter financials. Impressively, dLocal reported revenue of $161 million, up 59% year-over-year and 17% quarter-over-quarter. The company also saw a large jump in profits, reporting gross profit of $70.8 million in the second quarter of 2023, up 43% year-over-year compared to $49.6 million in the second quarter of 2022 and up 14% compared to $61.8 million in the first quarter of 2023.
Looking ahead, dLocal reaffirmed its guidance for the year of revenue between $620 million and $640 million and adjusted EBITDA between $200 million and $220 million.
Founded in 2016, dLocal connects global enterprise merchants with “billions” of emerging market consumers in over 40 countries across Asia-Pacific, the Middle East, Latin America and Africa. Hundreds of global merchants, including e-commerce retailers, SaaS companies, online travel providers and marketplaces use dLocal to accept local payment methods. They also use its platform to issue payments to their contractors, agents and sellers. Some of dLocal’s customers have included Amazon, Booking.com, Dropbox, GoDaddy, Mailchimp, Microsoft, Spotify, TripAdvisor, Uber and Zara.
Earlier this summer, TechCrunch caught up with dLocal co-founder Sergio Fogel, who rejoined the company in June as co-president and chief strategy officer, per a Bloomberg report, “as part of a push to help regain investor confidence and stabilize the company’s stock after it tumbled following a probe in Argentina and a short seller attack.”
Fogel was also among a group of shareholders who had purchased in the aggregate amount of about $160 million of the company’s Class A common shares in open market transactions — $100 million by General Atlantic and about $60 million by Fogel, dLocal co-founder Andres Bzurovski and dLocal chairman Eduardo Azar.
Below is the result of the interview with Fogel, edited for clarity and brevity.
TC: The last time I covered dLocal was in 2021. At the time, the company had raised $150 million at a $5 billion valuation. What has happened since then?
SF: A lot has happened. We went public at $21. The stock jumped immediately to $31 and continued upward till $60+. We crushed the numbers: TPV up 4x+, revenues up 3x+, adjusted EBITDA up 3x+. Then the stock declined with the overall market and was hit hard by a short seller report.
You went public a couple of years ago — obviously before the market took a turn — and we haven’t seen a lot of companies go public since. Do you feel you all made the right decision at that time?
Absolutely. For a payments company, reputation is key, especially for large merchants that we serve. Being a public company that is regulated in many markets gives our customers the confidence that their money is safe and that we comply with the strictest regulations. It has been a bumpy ride, but it was the right decision.
You recently rejoined the company after having stepped away for some time. Why did you come back?
I have been away, but I have never been far. Seba, our CEO, asked me for help, as managing a public company with 800 employees, a presence in 45 geographies and growing at a breakneck pace was taking a big toll on him, and he needed help. He could have hired someone, but we already share a high level of trust, and I know the business well. Of course, I could not say no, and honestly, I was missing the thrill.
When I last covered dLocal, you all described yourselves as a cross-border payments company. How would you describe what dLocal does today besides handling payments across much of Latin America, as well as parts of Africa and Asia, correct?
We expanded the scope a bit. We help the largest internet companies in the world move money in emerging markets. If a large company wants to accept cross-border payments, we’re there for them. If they want to pay their gig workers, we’ll help them. If they want to process payments locally, we will also help them. But we will never handle local payment processing for a local company — that market is well-served. We are uniquely positioned to serve a merchant in multiple geographies, with a high level of security and reliability, with just one agreement, one integration, one reporting platform — what we call “One dLocal.” It may sound trivial, but no other company offers one solution that covers so many different emerging markets.
Our fastest growing geography is actually Africa. We are still growing in all geographies but Africa is the fastest growing and one that we are very excited about because it’s such an underserved market.
What are you attributing the company’s recent revenue growth to?
Being a public company, we can only comment on guidance in the earnings calls and other appropriate forums, so I cannot say anything beyond that. However, I can expand on our revenue growth drivers.
Our first driver of growth is our sales team, who bring in more merchants. Merchants typically take some time to integrate and ramp up, so the growth that we see today is in large part attributed to merchants we signed last year.
A second driver of growth is geography. Our existing customers normally start in one or two countries, and then they expand to more and more countries. But this is dynamic, because we also expand our geographic coverage in response to their plans.
A third driver of growth is new products. For example, this year we launched an invoicing product that allows customers to accept payments without a technical integration.
And the fourth driver is that our customers are growing fast in our markets. While growth in some developed markets may be stalling, emerging markets continue to grow very quickly. These are young populations, with a growing middle class, eager to spend. We are indexed to the growth of our merchants in these geographies.
We are just scratching the surface. On a typical month, 40 million consumers pay through us. That may sound like a lot — until you realize we serve a market of 4 billion people, of which half are connected. We are serving just 1% of that population.
Are you looking to expand geographically anymore? Outside of the regions you’re already serving? How many employees do you have?
We will continue to expand geographically, albeit at a slower pace. But we will continue to be focused on the challenging markets; that is our DNA. We will not expand into the U.S. or Europe, as those markets are well-served and we have no value to add. We still have a lot to grow in the regions we are already in.
There were allegations of fraud late last year that the company denied. What exactly happened?
A short seller issued a report claiming that the company is a fraud and that we had used merchant funds to distribute dividends. Of course, before publishing the report, they took a short position, so they stood to profit from the price decline. The claims were absurd. The company is audited, and under a very high level of scrutiny. We run an external “Safeguarding of Customer Funds” review every year. Still, the audit committee decided to run an external investigation to provide all stakeholders — investors, customers, partners — reassurance about the business. The investigation found no basis for any of the claims.
What’s ahead product-wise? Anything new?
We are very focused on executing our plan. But, like everybody else, we are very excited by the possibilities that AI opens to all businesses and are exploring the area.
Obviously the fintech world has had its ups and downs over the past couple of years. What are your thoughts overall on the payments space?
There is a lot of hype around FedNow, but in my view, the really exciting developments in payments are happening in emerging markets. I would claim that Pix is the most successful initiative launched by any government in any field, anywhere in the world. Pix has taken Brazil by storm. You can pay anyone with Pix, from the largest department store to the smallest lemonade stand. Even beggars on the street take it. Every Latin American country is imitating it. Then you have UPI in India, e-wallets throughout Asia and mobile money, which is well established across Africa.
And this innovation wave is not over. In Brazil, we’ll soon see Pix with installments, open receivables and the Digital Real.
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PayPal is gaining a new CEO, the payments giant announced this morning. Effective September 27, 2023, senior Intuit executive Alex Chriss will become PayPal’s President and CEO, replacing current CEO Dan Schulman, members of PayPal’s board shared this morning in a press release.
The appointment was made after a months-long CEO search process focused on finding a new leader for who had experience with global payments, product and technology.
Like Schulman, Chriss was a long-serving member of his former employer, having joined Intuit 19 years ago, then growing his responsibilities over time. Since January 2019, he served as Executive Vice President and General Manager of Intuit’s Small Business and Self-Employed Group, responsible for more than half of Intuit’s revenue. He’s overseen a global organization with thousands of employees tasked with delivering products like QuickBooks and Mailchimp to thousands of customers.
In his most recent leadership role, he grew its customers and revenues at a compound annual growth rate of 20% and 23%, respectively, the board’s announcement states. He also led Intuit’s $12 billion acquisition of Mailchimp in 2021.
Chriss has the unanimous support of PayPal’s board and its CEO search committee, who were tasked with finding a replacement for longtime CEO Schulman, who informed PayPal of its plans to retire at the end of last year. CNBC reports Chriss was chosen from a pool of nine candidates. The board also met with over 20 investors, including activist investor Elliott Management, its report noted.
“With his depth of experience in product development, his passion for serving customers and his longstanding commitment to empowering and enabling small businesses, and his proven track record of developing and inspiring his team, Alex is the perfect leader to take PayPal forward and accelerate the company’s growth opportunities,” said John Donahoe, Chair of the PayPal Board of Directors, in a statement. “The Board search committee worked diligently and thoroughly to find the right candidate to take PayPal into its next stage of growth and expansion, and we are confident Alex is that person.”
Chriss joins PayPal at a time when the company has been restructuring, having announced in February it was laying off 2,000 full-time employees, or 7% of its workforce, citing the macroeconomic environment. It said its savings of roughly $600 million would be reinvested in projects like passwordless checkout, one-click in-app experiences, and leveraging AI for advanced checkout flows, among other things.
Donahoe also thanked current CEO Schulman for his “outstanding leadership during PayPal’s eight years of growth as an independent company.”
“Dan made many major contributions to PayPal and helped establish the strong foundation for the future,” he said.
Exiting CEO Schulman first joined PayPal in 2014, following its separation from eBay. Under his leadership, Paypal grew its revenues from $9.2 billion in 2015 to $27.5 billion in 2022, with total active accounts more than doubling to over 430 million in 200 markets. Total payment volume also increased 5x from $288 billion in 2015 to $1.36 trillion in 2022.
“I’m proud of what we have accomplished at PayPal and of the incredibly talented and committed people I work with every day,” said Schulman, in a statement. “Together, we have reimagined financial services and e-commerce, and worked to improve the financial health of our customers. PayPal makes a difference every day for its customers and communities and the Company is positioned for a great future. It has been a huge privilege to have the opportunity to lead this great company for the past 8 1/2 years. However, I’m at a point in my life where I want to devote more time to my passions outside the workplace. I remain 100 percent committed to working closely with the Board and my eventual successor for a smooth transition and to ensure we keep our positive momentum on track,” he said.
Schulman will remain on PayPal’s board until its next annual meeting of stockholders in May 2024.
Investors are reacting favorably to PayPal’s news, as the stock is up nearly 2% so far this morning.
The relationship between fintechs and incumbents has long been fraught with tension. But Marie-Elise Droga believes it doesn’t have to be this way.
Droga joined payments giant Visa as SVP, head of global and NA fintech partnerships in December 2022 to lead the development, commercialization and implementation of all Visa products, new payment flow solutions and “value-added” services for Visa’s fintech partner network.
“I work with the earliest-stage orgs who are at the beginning of their journey and looking for solutions to grow before they even think of scaling, as well as global founders that may not be headquartered here,” she told TechCrunch in an interview. “Partners range from innovative fintech startups to established big tech.”
Droga says she thinks of herself as a creative and strategic global business builder with deep roots in sales and partnerships. Before she joined Visa, Droga was at Western Union where she says she became an expert in retail and digital cross-border payments, expanding the company’s relationships with such companies as Amazon, Airbnb and Google, as well as driving strategic efforts to accelerate digital growth and reinvent the company’s approach to channel distribution. And prior to Western Union, she led a variety of international sales and marketing organizations within companies such as Marietta Corporation, American Express, imago and Ray-Ban.
At Visa, Droga says she is focused on “identifying and synthesizing” factors that influence the payments landscape, including new behaviors, new stores of value, new frameworks for money movement and new transaction environments.
“It’s a very rich function that helps Visa be at the forefront of product innovation,” she added. “Our team is constantly challenging itself in terms of what trends do we have to pay attention to and how does that translate into growth, not only for our products, but also so we can have even more pertinent solutions for our clients.”
Looking ahead, Droga said she is excited to “focus on acquiring and developing partnerships across the entire payments ecosystem focused on fintech.”
TechCrunch sat down with Droga to hear more about her role and how Visa seeks to work with fintech startups. The interview has been edited for clarity and brevity.
What is Visa’s stance on the relationships between incumbents and fintech companies, and how do you approach your overall relationship with the fintech community?
Simply said, our fintech partnership practice is the growth engine of the organization. Fintechs are definitely not competition for us. They, first of all, helped digitize the payments sphere and global economy. They are an inherent part of our growth strategy – whether as a standalone partner – either by providing a solution to, or also more interestingly, as a way to help our legacy clients (banks) differentiate. We use them as a sounding board – a means to an end to help the core ecosystem grow and progress.
We also want to help service providers that have a strong interest to position themselves into tier one and tier two financial institutions and bring them technology that is potentially just too complex, too costly, and too too lengthy for them to develop in house.
Fintech and our network of partners in the space is a vital growth engine for Visa, and a key driver in realizing our mission – to uplift everyone everywhere. Our portfolio of fintech partners is diverse and continues to grow and scale. Over the last two years, the number of fintech card programs generating $1 billion in payment volume annually has more than doubled.
What are some specific ways you engage with fintechs?
We engage the fintech ecosystem through several programs to make it easier for fintechs to partner with us and tap into our network of partners. Fintech FastTrack, our flagship program for fintechs, is designed to help launch new financial features quickly – like launching a card program or moving money in near real-time with Visa Direct. We provide streamlined onboarding, turnkey access to hundreds of ecosystem partners, and simplified commercial agreements.
Additionally, Visa Ready is a certification program that helps technology companies build and launch payment solutions that meet Visa’s global standards around security and functionality. Visa’s Fintech Partner Connect builds clear pathways between Visa’s issuing clients and best-in-class fintech providers.
We also support up-and-coming businesses through programs and platforms that engage the fintech and start-up communities, including the Visa Accelerator Program in Asia Pacific and the Visa Innovation Program Europe, a fintech accelerator platform created for Southern Europe.
All that to say, we continuously evaluate and invest in companies that have the potential to advance digital payments for our clients and customers – ultimately viewing fintechs as strategic partners around the globe.
Image Credits: Marie-Elisa Droga / Visa
How involved are you with any potential acquisitions of fintechs?
We often collaborate with the Visa Ventures team. We are sort of a scout engine for Visa’s venture arm.
I know Visa has recently focused some very concerted efforts on serving creators. Can you share more about that, and how you view creators as an addressable market?
We see the creator economy emerging as the digital equivalent of tomorrow’s small and mid-sized business segments — or the new breed and next-generation of SMB clients. Yet, we recognize that even though creators typically have the same needs as a traditional small business, they are treated as individual consumers for the most part.
Despite being able to monetize, creators often don’t have access to adequate tools to sustain a successful business and manage their financial needs. From inconsistent cash flow and slow payouts from platforms to a lack of lending options and foundational knowledge to run a business – creators experience many of the same challenges as SMBs – but with less support.
Our efforts to uplift creators include working with platforms and payment service providers to allow creators to be paid faster and more efficiently, such as the ability to push funds instantly to a debit card, a wallet account, or in some cases a bank account in real-time or 1-2 business days.
By providing more optionality and faster rails, we help alleviate some financial pressure that may be bogging down many creators today.
Some of the initiatives Visa has developed to help support the creator economy, according to Droga, include:
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The crypto payments space is seeing a surge of activity these days as developers strive to make decentralized finance as user-friendly as web2 experiences.
Eco Inc, an a16z-backed payments startup that’s raised $95 million in funding to date, just unveiled a decentralized payments project called Beam. In an interview with TechCrunch, the company’s CEO Andy Bromberg described Beam as a non-custodial payment system that functions like a “global Venmo.”
The wallet’s non-custodial nature means that no centralized party, such as a bank or exchange, has access to users’ funds. This is an increasingly attractive feature for consumers, especially after the FTX implosion. The wallet is not linked to one’s identity, making it an ideal choice for those who want financial privacy.
The challenge facing many self-custodial wallets, according to Bromberg, is that they require users to be crypto-savvy. Beam’s goal is to make decentralized wallets intuitive enough that even people new to crypto can be onboarded within minutes.
To begin using Beam, users need only visit the wallet’s website, where a QR code linked to a wallet address is automatically generated. From there, they can transfer USDC stablecoins from their existing wallets or use the popular on-ramp service, Moonpay, to convert fiat into crypto.
To transfer funds to others, users can share a wallet URL that contains the cryptocurrencies. This means that the receiver doesn’t need to already have a crypto wallet set up in order to receive the tokens.
While these features may seem straightforward compared to the wide range of options available on web2 payment apps, the reality is that “it’s so much harder to do things decentralized,” as Bromberg noted.
“The promise of crypto is self-custody, decentralization, censorship resistance — all these things, and if you want to maintain those in a product, it adds all sorts of developer friction to build that,” he said. “What we’re really proud of here is [Beam] is the closest I’ve seen to a web2 experience.”
The app is “instantly globally available,” added Bromberg. Traditional financial products, in comparison, “need to be launched country by country because you have to be touching the banking rails in every country.”
Beam is not trying to compete with other wallets on the market, many of which tend to serve general purposes, like logging into decentralized apps, said the CEO. Rather, it’s “more like a payments wallet built with guardrails.”
“It does a narrow set of things and only support certain tokens and certain interactions,” he said. “I think it actually decreases the chance that people get scammed or defrauded.”
In its early stage, Beam is targeting peer-to-peer payment scenarios and strives to eat into the global Venmo use case — especially in dollarized regions outside the U.S. Its more ambitious goal down the road is to become the global Visa.
With new technical upgrades emerging in the blockchain ecosystem every few months, Eco has had to stay on top of the constant development.
“I think literally until the last few months, it wasn’t possible to build something that felt as seamless and easy as cash,” said Bromberg. “And now it is with account abstraction, roll-up development and new blockchains, that we’ve built this really compelling, really easy wallet.”
Simply put, account abstraction allows developers to add new functionalities such as social recovery to wallets, eliminating the vexing 16-word seed phrase and improving the usability of self-hosted wallets. Account abstraction has been possible thanks to a new Ethereum standard, ERC-4337, which has given rise to a new class of wallets called “smart contract wallets,” which are programmable.
Building on a smart contract, Beam has its access keys sharded into three places — one’s Twitter account, a password they set up, and their browser, any two of which can reconstruct the original key.
The issue with some smart contract wallets, according to Bromberg, is that they are serving crypto-native users. For instance, one needs to already own Ether in order to send USDC.
“That’s like saying, in order to send someone dollars, you need to have like Venezuelan currency in your wallet. It doesn’t really make any sense for consumers,” Bromberg suggested. Instead, Beam lets users pay a fixed fee in USDC when they transfer USDC.
Beam is also replacing long, confusing wallet addresses with ENS domain names, which are decentralized identities running on Ethereum. Within Beam, users can create their own ENS names by paying with the native Eco tokens. Say I have registered “rita.beam.eco,” and my name will simply be displayed as “rita” on the platform.
Roll-ups, or Layer 2 solutions, tackle another major challenge in crypto’s usability. They lower gas fees (transaction fees) and increase a network’s throughput by processing transactions off-chain and then submitting them to the main network in batches. Beam is powered by two of these Layer 2 methods, Optimism and Coinbase’s Base.
Eco is building with a team of 45 employees across North and South America. Its previous investors include Andreessen Horowitz, Coinbase Ventures, Founders Fund, Lightspeed Venture Partners, and Pantera Capital.
Shai Gabay and Eli Ben-Nun, two entrepreneurs based in Israel, met in 2018 while working at Cynet, a cybersecurity startup developing extended detection and response tools. While there, they came to realize that there was a growing need to secure payment transfers, which were becoming increasingly susceptible to fraud and cybercrime.
According to one recent survey, payment fraud affected almost 60% of companies in the U.S. in 2022. And of the companies responding to the survey, over half think payment fraud attempts will increase over the next year.
“Many businesses still rely on manual processes to validate payments, which can be time-consuming and prone to errors,” Gabay told TechCrunch via email. “Moreover, the sheer volume of payments processed by businesses often makes it impossible to validate each payment before they are processed by the bank.”
Trustmi, whose platform is designed to integrate with existing payment workflows and systems, attempts to prevent fraud by conducting an initial assessment of past payments and applying this model to future payments in search of anomalies. Leveraging a “trust network” that crowdsources data from vendors and businesses, Trustmi delivers a “comprehensive” approach to payments security, it claims, while letting customers retain full control over their payment processes.
Trustmi also automates and handles audit preparations, establishing financial reporting standards, protecting data and monitoring for potential breaches. The platform’s payment approval workflow, meanwhile, lets users flag errors and attacks, making it easier, ostensibly, to spot areas where errors and attacks frequently occur and take steps to fix them.
“We offer a one-week assessment where historical data is captured to establish a vendor digital fingerprint. This allows us to flag deviations and changes in the vendor’s information and banking details,” Gabay explained. “By capturing a complete view of the payment data flow and analyzing hundreds of data points, we uncover vulnerabilities and eliminate threats effectively.”
It’s tough to know how truthful the “effectively” part is, and TechCrunch can’t speak to Trustmi’s fraud takedown success rate. But despite all that and competition from vendors like Alloy, Hawk AI and Cable, customers appear to buying the sales pitch.
Among Trustmi’s client list are Colgate-Palmolive, Monday.com and CNA Insurance as well as “dozens” of other companies across the manufacturing, pharmaceutical, healthcare and insurance industries. That high-profile customer list attracted the attention of investors, who today put $17 million toward the startup in a Series A round, bringing its total raised to $21 million.
Cyberstarts led the tranche with participation from Zeev Ventures.
“Our latest influx of capital will play a pivotal role in expanding our enterprise customer portfolio and securing business payments at an even greater scale,” Gabay said. “As we move forward, we remain steadfast in our commitment to working with more Fortune 500 companies across all verticals, solidifying our position as the market leader and go-to solution for business-to-business payments security.”