Payments Veterans Seek to Unlock Blockchain's Power With Align Commerce
The bitcoin blockchain can be utilized to store transaction records in its public ledger database, but that is far from its only use case.
Novel real-world applications in the fields of smart contracts and intellectual property rights have begun to surface, providing a glimpse of the kinds of future technologies many believe cryptocurrencies can help society unlock.
Still, the most immediate use for the technology has been for payments, and with this is mind, startup Align Commerce intends to use bitcoin as a ‘container’ to move fiat currency quickly and easily across borders.
Relying on bitcoin's blockchain, this could offer businesses itimproved efficiency, transparency and, quite possibly, electronic payment ubiquity across the globe.
Adding to Align Commerce's potential is that CEO and co-founder Marwan Forzley has a background in the payments industry. Speaking to CoinDesk he said he decided to go all-in on bitcoin and blockchain tech in order to disrupt what he considers outdated business transaction systems.
“The interesting thing about the blockchain is its ability to essentially outsource payment processing to endpoints – removing intermediaries.”
The intermediaries Forzley plans to bypass are the arguably complex tangle of banks that international fiat payments are currently forced go through when crossing borders.
Previously, Forzley founded a company called eBillme, an alternative payment method that plugged into shopping carts and connected directly with users' online bank accounts.
The firm boasted Sears, Buy.com and Tiger Direct as customers, and was sold to Western Union in 2011.
Forzley said that in his ample time studying payment networks, he kept coming back to one realization: the banking system was highly antiquated.
“These systems are very domestic in their construction, designed pre-Internet,” he said.
For example, SWIFT, a payment order network used by banks across the world, is one of the systems that today powers the global payments system.
Forzley believes that payments don’t necessarily have to be beholden to SWIFT, though, that they can use newer technologies. “These systems can be tied together through a different protocol called the blockchain,” he said.
“The reason why [Align Commerce uses] the blockchain is, if you look at flows of funds around the world, the most difficult transactions, the most expensive with the most friction, are basically cross-border transactions.“
Bitcoin as a container
What Align Commerce is doing can be compared to a shipping container that moves goods from different countries – point A to point B.
“It’s a container that has value,” explained Forzley.
For example, a payment sender can have US dollars at point A and a euro receiver at point B. To facilitate this type of transaction, Align Commerce uses bitcoin in the middle of the transaction as the container.
“We are using the blockchain as a way to carry the transaction. This transaction would have gone through correspondent banks; this is a simpler way to carry the transaction from the sender to the receiver.”
This concept improves over existing models used for cross-border payments in terms of higher transparency and efficiency, Forzley argues.
“[Payments] end up being recorded as transactions on the blockchain. You’ll see [Align Commerce transactions] just like any other transaction,” he said.
The Align Commerce system, in essence, requires the use of bitcoin exchanges with liquidity to move various denominations of fiat. Along with improved transparency, Align Commerce believes bitcoin is a faster and more efficient method of moving money because it avoids the complex foreign exchange currency market.
“We work with all the [bitcoin] exchanges in the market that have volume. [The] transaction comes in, it hits our account. We then move it to the exchange, convert, move, convert again,” Forzely said.
In addition, Align Commerce already has customers, according to Forzely:
“We have accountants, lawyers and exporters and importers. Different e-commerce merchants. These are all different markets.“
Regulation and overall cost
Align Commerce clearly depends on bitcoin wallets, exchanges and blockchain API companies in order to operate, but it largely avoids the existing payments system – meaning a reliance on the still-nascent bitcoin economy
So, the question remains, at a time when Western Union indicates its service is expensive because of regulation in regular payments, how will Align Commerce deal with that issue when it ultimately comes to bitcoin?
“There will be regulation,” Forzley said. “You will need to run know your customer (KYC) and anti-money laundering (AML) regulation. You need to run risk management and you need to have a business and you need to make money.”
Align Commerce’s strategy centers on providing expedited service and improved tracking ability compared to what banks offer right now. The company is steadfast in its resolve that the blockchain will help it compete in cross-border payments, even if increased regulation means higher expenses.
“When all these [regulatory] costs pile up, they will add up. Despite all this I do still think you can operate at a cost structure that is more efficient than what exists today.”
As a result, the issue of payments-based regulatory compliance is not going to disappear just because of cryptocurrency's emergence.
Still, Forzley believes Align Commerce will be able to obtain customers looking for payments solutions with the bitcoin and blockchain value-add of global transparency and efficiency.
Sell global, get paid local
With his previous company, Forzley was able to add online banking to e-commerce shopping carts. But, what about implementing that concept globally?
Along with business-to-business payment invoicing, Align Commerce is executing on that idea with a product called Payinlocal.
Using the aforementioned bitcoin container concept, Payinlocal allows an e-commerce merchant the ability to accept many different types of currency.
Accepting electronic payments is one of the biggest problems businesses have in some regions. This is especially true in places where credit cards or other digital payment solutions are not very good options.
“Payments are a difficult thing to do if you’re growing your business and you need to collect money from around the world.”
With Payinlocal, Align Commerce allows an e-commerce site to receive local currency as payment. By using bitcoin as a transport method, these payments can be completed even if customers are located across the globe – and using a completely different currency.
In essence, Payinlocal allows ecommerce businesses worldwide access to potential customers. In the end, this is all possible because of the borderless potential of using bitcoin as container and its blockchain technology as a device for tracking.
Align Commerce is currently operating in a private beta.
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