Triple-A Payments, a fintech based in Singapore, has raised $10 million in a Series A funding round for its crypto-payments business. The raise comes at a time when funding for many fintech businesses has dried up, particularly in the crypto space.
Founder and CEO Eric Barbier attributes the raise to the company’s license, its ability to deliver so far on what it’s promised, and his own reputation. Barbier co-founded Thunes, a payment fintech, in 2007.
Peak XV Partners (previously the India and Southeast Asia arm of Sequoia Capital) led the round, along with existing investor 1982 Ventures in Singapore and Abu Dhabi-based Shorooq Partners.
Barbier founded Triple-A in 2017 while he was transitioning out of the role at Thunes.
“I discovered crypto was solving two issues,” he said, which come down to disrupting the credit-card processors and the SWIFT network.
First, many fintechs and other merchants don’t want to pay the likes of Visa and Mastercard chargebacks. The card processors charge this to cover fraud. This system has worked because by putting the onus on merchants, rather than on consumers, it has made credit cards popular. But it has also worked because there weren’t alternatives.
Second, stablecoins enable users to transfer money and settle in real time, round the clock. This may not be relevant to all business cases, but this contrasts with segments such as remittances, which require pre-payment or pre-funding with various correspondent banks that rely on SWIFT messages to facilitate transactions.
“The time and cost is especially high in emerging markets,” Barbier said. “Banks and intermediaries sit on that money for as long as possible.”
The startup recognized the need to be regulated. Two years ago it received a Payment Institutions License from the Monetary Authority of Singapore, which enables Triple-A to do merchant acquiring, money transfers, and digital-payment tokens. This last item includes serving as an on/off ramp between fiat and crypto, as well as providing custody of digital assets.
The startup has a similar license from Banque de France (the French central bank), which enables it to provide services throughout the European Union.
Today, Triple-A has three crypto-payments businesses in operation.
First it allows e-commerce sites and other merchants to add crypto as a payment method. One customer is Selfridges, the London luxury retailer. If someone buys a £500 handbag at the store and wants to pay with crypto, Triple-A locks in the exchange rate at point of sale, takes the equivalent in crypto from the person’s wallet, and the following day wires the pounds to the merchant.
In the process, Triple-A takes on the risk of currency/crypto volatility, compliance, and custody. The resulting transaction feels like a routine fiat payment to both the merchant and their customer.
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Triple-A is able to do this by maintaining bank accounts in key markets, so its treasury desk can move liquidity among them. This is similar to how other payment fintechs manage international transactions, but Barbier says the costs to Triple-A are much lower, because it’s dealing in stablecoins. This makes it fast and easy to transfer in and out.
There is another reason he says this business is more efficient: the second business of Triple-A introduces a complementary stream of payments, and the fintech’s treasury can net transactions.
This second business is enabling merchants or the self-employed to pay suppliers in stablecoins. This is aimed at gig workers or small businesses in markets with volatile and unreliable fiat currencies.
For example, someone in Argentina or Bangladesh may prefer to hold US dollar-backed stablecoins (such as Circle’s USDC or Tether’s USDT) rather than pesos or takas. If they have a global freelance business, these people want a US-backed currency that they can spend outside of their country.
“The revolution that’s happening is that stablecoins enable anyone on the planet to own US dollar-denominated accounts,” Barbier said. “In Singapore, I can go to DBS and get dollars or euros or yen, but this is exceptional. Worldwide, many people can’t do this. Businesses and freelancers can use a stablecoin to be part of the global economy.”
Triple-A’s third leg is B2B payments – a similar argument but for companies trading among one another across borders. The instant settlement is attractive versus waiting for payments to wind through the SWIFT network; as well as to smooth transactions when one party is in a jurisdiction with capital controls: better for companies to keep some of their money in dollar stablecoins so they can make other international payments, rather than cash it in at home, where the money can’t easily go back abroad.
Stablecoins versus other crypto
Barbier says about 60 percent of the company’s transactions involve stablecoins. In the retail use case, some people prefer to use Bitcoin, Ethereum or other crypto.
Luxury outlets find crypto whales are more likely to spend higher amounts when they pay in crypto, Barbier says.
DigFin asked if this a sustainable business: there’s not much to do with crypto in the digital world other than speculate, and spending it in the real world remains difficult. If someone came into wealth by simply being early to the space, are they spending as much as they can whenever they get the chance?
Barbier says that may be true – but for those stores that onboard crypto capability, it means a jump in sales. He didn’t specify the fees merchants pay Triple-A for this service.
He says the long term business is in areas such as remittances. “The remittance industry shouldn’t exist,” he said. “Sending money from a developed market to someone in an emerging market doesn’t make sense. If you send stablecoins, the recipient can hold it as if it’s the US dollar, and only convert it when they need to spend it locally.”
Triple-A Payments will use the proceeds from its capital raise for a number of items.
First, it wants to expand and get licensed in the United States, the Middle East, and Hong Kong.
Second, the costs and complexities of regulation continue to climb, particularly in the wake of the Silicon Valley Bank collapse in March. “Since then, regulators are stepping up their scrutiny of everyone,” Barbier said. “Few can cope.”
Third, the business needs more capital behind its treasury operation: “We need to bulk up the balance sheet in order to show banks that we have a global network to do local settlements and avoid the SWIFT network. Capital is a sign of trust.”
Barbier’s not worried about competing against central-bank digital currencies. “I don’t think central banks have the mindset to be successful.” But he is keen to add other stablecoins if they become popular: for example, he’s waiting to see how well PayPal’s stablecoin fares. “And if JP Morgan opens its internal coin, I’ll be the first to adopt it,” he said. “Stablecoins should be left to the private sector.”