- Blockchain transactions for Veem more than double in a single year
- Global money exchanges increasingly confident about blockchain technology
Veem, the international money transfers platform for small businesses, is making headway in becoming the world leader in bitcoin payments, with the volume of transactions on its blockchain channel more than doubling in Q4 2017.
The San Francisco headquartered startup was established in 2014 by Marwan Forzley, a tech-savvy entrepreneur who sold an earlier startup to Western Union. It uses three technologies to make international payments: blockchain, Treasury and SWIFT (Society for Worldwide Interbank Financial Telecommunications). And it’s succeeding in its mission to make cross-border payments to contractors and vendors faster and simpler.
The disadvantage of SWIFT, the older technology still used by banks for sending international payments, is that it’s seriously slow – transactions typically take days to settle. Blockchain transactions, by contrast, take mere minutes to process across the distributed ledger technology. This type of transaction now accounts for 62% of Veem’s total transactions, more than double the proportion recorded a year earlier.
It appears that blockchain technology has been gaining trust in the international business community, reflected by the fact that more and more global exchanges are comfortable transacting in and out of cryptocurrencies like Bitcoin.
In an interview with CNBC News this week, Forzley said: “Like any new technology, none of this bakes overnight. Compared to 2014, the environment is maturing and becoming a lot more business-like.”
Businesses have been turning increasingly to Veem over the last year because they aren’t required to make laborious trips to the bank and complete tedious forms. Veem’s software simply decides which transfer method to use with each customer, and then executes the transaction.
However, as blockchain remains an emerging technology, there are teething problems – notably, liquidity constraints. If Veem wants to move money from the US to Mexico using blockchain, for example, it starts by transferring US dollars to bitcoin stateside, and then from bitcoin to pesos in Mexico. But if blockchain is used, its economic viability depends on there being sufficient demand on the receiving end. If there isn’t, the transaction becomes too expensive to be commercially worthwhile.
As Forzley explains: “If we're doing it in the middle of the night and there's not enough demand for that particular transaction, then the bid-ask spread goes too wide and the economics are not as attractive.”
He went on to say that the best liquidity is to be found in Europe, Japan, Mexico and the Philippines, although conditions are also improving in India and Brazil.
The fast-rising fintech startup raised a hefty USD $24m last year (investors included GV, previously Google Ventures, and National Australia Bank Ventures). Veem’s roster of businesses served includes surfboard manufacturer Global Surf Industries, software firm Checkster, and knife-maker Bulat Kitchen.
Although blockchain currently accounts for the majority of Veem’s transactions, it still only conveyed 10% of the total quantity of money sent in Q4 2017. For the time being, at least, Veem finds it more efficient to use the more traditional money transfers methods for large sums. But while there has been plenty of talk in Silicon Valley about the potential of blockchain, Veem has gone beyond mere talk to a successful real-world application of the technology.
