MobileCoin Looks to Disrupt Venmo, Cash App, Paypal with Frictionless Blockchain-Enabled Payments
At World Economic Forum in Davos, Switzerland, Blockchain Journal editor-in-chief David Berlind met with Mobilecoin Head of Business Development Brady Forrest who talked about how Mobilecoin's global mobile payment app makes it possible to send money to anyone for a fixed fee of 1/4th of a cent. The app is enabled by the MobileCoin blockchain and like other distributed ledger-based payment workflows, sends cryptocurrency from the originator of a transaction to the recipient. In the case of MobileCoin however, that cryptocurrency can be MOB (the native cryptocurrency of MobileCoin) or eUSD; an asset-backed stablecoin pegged to the value of US$1. Onboarding appears relatively friction-free since payments processor Moonpay will exchange fiat directly from Apple or Google Pay (or a debit card) into one of the two cryptocurrencies. Offboarding from one of the two cryptos to Fiat requires a centralized exchange such as Binance. MobileCoin functionality is also available directly from within the Signal app and, to ease the minds of those concerned about custodial wallets, relies on a non-custodial wallet called Moby (full-text transcript appears below).
By David BerlindPublished:January 19, 2023
How can blockchain be used to disrupt existing payment apps like Venmo, Cash App, and Paypal?
David Berlind: I'm David Berlind with Blockchain Journal. I'm here in Davos, Switzerland, at World Economic Forum 2023, and we are scouring the town looking for great blockchain stories. And I've stumbled upon another one from somebody that I've known for many years, and we've found our way to bump into each other again in a newer life. We had a previous life at some point in the past. Brady Forrest, you're head of business development for MobileCoin now.
Brady Forrest: Yeah. Yeah. It's really good to see you again. It's been probably over a decade since our O'Reilly time together.
Berlind: It's incredible.
So, thank you very much for joining me here on such short notice, but it was great just to see your message and get you in here. MobileCoin. That sounds very much like a lot of other things in the Blockchain space. So let's start at the top. What is MobileCoin?
Forrest: Yeah. MobileCoin is a company that's been around since 2017. We have created our own layer-1 blockchain, which is designed from the ground up for mobile payments. It is designed to be compliant, end-to-end encrypted and fast. So exactly what you would want for transactions on your mobile phone.
Berlind: Okay. So who's a typical target user of this application or your chain?
Forrest: So MobileCoin is available worldwide. We're available on Signal Messenger, and we're also available on our own wallet, Moby, which just came off the wait list last week –
Berlind: A wait list of an app store?
Forrest: Yeah, basically. Well, no, we've been in app store for a while, but we're now letting anyone who wants to join or use Moby can.
Forrest: And it's really for anyone who wants to send money cross border quickly.
Forrest: And so where we're starting to see traction, it's with creators. So creators have this international audience. You're releasing YouTube videos, putting up great photos on Instagram, and some people from your audience can maybe tip you or view ads and help you out that way. But somebody in another country can't necessarily express their appreciation and Moby is a great way of doing that.
Berlind: Okay. There are other applications out there that don't involve Blockchain at all. I'm thinking of Venmo, CashApp, PayPal, and there's just a whole host of... Patreon. Patreon is one way that creators connect with their audiences, and Patreon facilitates some form of exchange of value, micro payments, so that you can help fund the creator personally. What's different about this? What makes this special?
Forrest: All of those companies are pioneers and all of those companies have allowed folks to move money around even faster than before. However, what we're trying to do is dramatically lower the costs. So, to send a transaction, like if I'm going to send you five bucks and I can send it to you anywhere in the world, less than a quarter of a penny. And that cost goes to a nonprofit. So that's not how MobileCoin is trying to make money. And so money can move and settle in under five seconds with no fees taken out of that.
Berlind: Other than a quarter of a penny?
Berlind: And when that happens, when I'm sending money to you or you're sending money to me, $5 to me, are you sending me fiat currency? Are you sending me five US dollars or are you sending me cryptocurrency? What is it you're sending to me?
Forrest: So right now you have two options. You could either use MOB, which is our first token, and that came out a couple of years ago. It's listed on Binance. Or you could use our brand new stablecoin, eUSD, electronic dollars. It's available on a couple of exchanges and it's same settlement, same cost, but if I send you $5 on Friday, it'll still be worth $5 on Monday.
Berlind: Okay. So that's a new stablecoin.
Berlind: eUSD, there's a lot of other stablecoins. One of the big questions, particularly after what happened with Terra Luna this past year, algorythmic stablecoin, how is this one backed?
Forrest: This is backed one-to-one. We do not want to play around with algorythmic. Our goal is to make sure that what the customer thinks they're getting is what they actually get.
Berlind: So what's backing it? What are the actual assets that are backing eUSD?
Forrest: Yeah, so we work with Reserve protocol on this, and it is backed by a basket of USDC and BUSD.
Berlind: Okay, great. Yeah. Well, oh, USDC –
Forrest: The largest stablecoins.
Berlind: Yeah, circles right down the promenade here. So they're here in Davos as well. Just going back to the quarter penny, could you compare that to what it's costing today to do something similar, just so that people understand how disruptive this is to the status quo. Which by the way, the status quo hasn't been around for very long.
Forrest: No, no. This is all new. I still remember when I first signed up for my first PayPal account, but to use PayPal as an example, a couple months ago I was going to a conference overseas. The conference organizer wanted a couple hundred dollars, I sent her money in PayPal and they didn't tell me what the fees were going to be, and it ended up being 5%. So I had to guess as to how much overage to give her.
Berlind: Right. Because they're taking it out on her end, and you want to make sure she's whole by the time she gets her money. Okay, so when we're sending money to each other or you're sending money to a business like that, you're sending either eUSD or MOB, which is the native Coin of the MobileCoin.
Berlind: MOB what? Moby is the network? What's –
Forrest: MobileCoin is the network, and MOB is the token.
Berlind: MOB is the token. Okay. How do I get my Fiat currency... how do I exchange some of my fiat, my US dollars, for this? Do I have to go through exchange? How does all that work? Because if I'm paying you, or I'm exchanging either eUSD or MOB with you, at some point I want to cash that out. How does it work end-to-end for the sender and the receiver?
Forrest: Sure. Getting in and out of crypto, that is the problem that a lot of people are trying to solve right now. And right now in Moby, you're able to use Google or Apple Pay to buy the currency with your debit card.
Berlind: Wow. So you can just take... Because with an exchange like Binance or something like that, you have to attach your bank account to it, and then you have to move some cash into the custodial wallet that they have. And then you have to launch into a trading pair where you're trading the USD that's in your wallet for whatever cryptocurrency you want. You're just going straight from a debit card or Apple Pay or Google Pay into –
Forrest: Yeah. Yeah, we have a great partner in MoonPay, and so you can just put your debit card in, load up with MOB, send it to whoever it is. And then as of right now, we do from MOB into an exchange. But of course we're looking at getting more banking off-ramped.
Berlind: All right. So, just for our audience so that they know, and I'm going to go through the workflow here. It's all in the background, that you don't have to interact with MoonPay, but you're working with MoonPay as your partner. You're like a payments processor, and they are crypto ready, they understand crypto.
Forrest: Yeah. And they handle the KYC and AML. Because we want to make sure –
Berlind: Hold on. KYC, AML, what does that stand for?
Forrest: Sorry, sorry. Totally. So KYC, is "know your customer" and that's to follow all the anti-money laundering laws, AML.
Berlind: Right. Okay. So they handle that aspect of it for you. I've either got a debit card or I've got Google Pay or Apple Pay. I say, "I want this much MOB or eUSD." And then once I have that, then I send money to you and whatever it is, and it only costs me a quarter penny. Doesn't matter... It's not a percentage basis. It's just a quarter penny, flat fee, no matter what it is.
Forrest: It's a flat fee.
Berlind: Right. And you're basically passing that savings along to the customer because there's no 10%, five... At a percentage level, it can get pretty expensive if it's a big transaction. It can be anybody in the world.
Berlind: Once they get it –
Forrest: Net of OFAC.
Berlind: I'm sorry?
Forrest: Net of OFAC. So we block OFAC countries.
Berlind: Okay. None of the bad guys.
Forrest: None of the bad guys.
Berlind: Okay. And then once somebody receives that money, then they have a wallet. It's your wallet. They receive it into their wallet, but then they have to move it from that wallet to an exchange like Binance, and then from there they can convert it back to whatever fiat that the exchange supports?
Forrest: And we are aiming to allow you to offload it into your bank account, either through ACH debit cards, those are all things that are coming.
Berlind: Is there ever a time where I might be able to just put it back into my Google Pay as a credit or something like that?
Forrest: Life is long. Product timelines are long. I think everybody wants people to be able to move their money around and do whatever they want with it.
Berlind: Yeah. You said that the quarter of a penny of the transaction goes to non-profit or –
Forrest: Yeah, it goes to the MobileCoin Foundation. So MobileCoin, the software behind it is open-source, it's available on GitHub. Anyone can look at it, anyone can spark up their own node. And then the MobileCoin Foundation, which is an independent body, they govern the software and they help govern the network. Though the network itself is made of a bunch of independent organizations, including Ideas Beyond Borders, The Long Now and DreamHost, MobileCoin, a number of other companies like that.
Berlind: And what's the business model? It sounds like a quarter of penny's pretty small. I need a lot of transactions just to get anything going. What's the business model to keep the whole... Is it with a consortium of organizations like a coalition. You've got the foundation and you've got the network and all that. How does this stay an ongoing concern?
Forrest: We want to make this really easy for consumers and customers. And the sooner people start using it, then merchants, businesses, they'll want to start interacting with the network, and then we can build software to help them. And you can picture services on top of it that make it a lot easier for those organizations to actually work with our network. And there's money to be made there.
Berlind: Do you see something like this being integrated in... you mentioned merchants. Do you see this being integrated into point-of-sales systems and things like that?
Forrest: Oh, absolutely.
Forrest: We have a number of ex folks from Square on the team, and I think they know how to build terminals.
Berlind: So there's some good pedigree in the company?
Forrest: Yeah. Yeah. Bob Lee, he's Chief Product Officer.
Forrest: He was the first CTO at Square, and he created Cash App.
Berlind: Okay. Yes.
Forrest: And so he joined us to... basically Moby's goal is to be the global Cash App.
Berlind: Okay. And Cash App has got some limitations to its geographic operation. Where is it?
Forrest: Cash App is US only.
Berlind: US only.
Berlind: So again, you're hitting a bunch of important things that other options don't hit. You're hitting the cost issue, which everybody's sensitive to, particularly when other solutions are doing it on a percentage basis. You're basically flat, quarter of a penny per transaction. You are hitting the cross border thing. So I can pay a creator, if I see some really cool K-pop stuff in Korea I can pay a creator over there from that. And you're also taking the friction out, particularly of onboarding when you're just using a debit card or Google Pay or Apple Pay. That's pretty huge because you don't see a lot of that in the crypto space.
Forrest: And both of the wallets that we've talked about are self custodial, meaning that –
Berlind: Yeah. What does that mean? So everybody has a chance because that's a bit of a rabbit hole. This whole idea of custodial wallets, non-custodial wallets. I mentioned custodial as when you're keeping your funds in with Binance, that's a custodial wallet. So just kind of break that down —
Forrest: Yeah, if you've ever heard, or if any of your listeners have ever heard, the phrase, "Your keys, your crypto."
Forrest: Our wallets, follow that.
Forrest: They are your keys. It's your crypto. And no one can make a payment or take anything out of the wallet without your permission.
Berlind: And so the benefit here, just to be clear, we all know what happened with the FTX. Big exchange, had a lot of custodial wallets. A lot of people had their crypto in those custodial wallets. Probably a lot of people had their USD, their fiat currency in those custodial... And then suddenly the whole thing implodes, and they have no access to their funds because the custodial wallets are on a technology that's run by FTX. And FTX is shut down. When it's a custodial wallet, it's in your phone, you own it, nobody else is in control of it. So anything like that happens, nobody can take it out.
Forrest: Yeah. And for both of the wallets, we've tried to really make this as easy as possible. So of course, a lot of crypto, you have your 24 words, you can reconstitute a wallet wherever you need to.
Berlind: Seed phrase.
Forrest: We have worked with Signal to basically have a pin based recovery so you can recover your wallet and all your funds and all your transactions just from your phone number and a pin.
Berlind: Okay. Oh, wow.
Forrest: So if I throw my phone in a river, I can then just get another phone. I re-authenticate into Moby with my phone number, and then I remember my pin.
Berlind: I see.
Forrest: And suddenly I have all my funds back.
Berlind: Oh, that's great.
Forrest: And so we're just trying to make crypto as easy as possible.
Berlind: What, if any, other cryptocurrencies will your wallet support? Because I personally am running into this thing where it's like, "Wait a minute, I thought I was just going to have..." I only have one wallet in my back pocket, but I happen to have 10 other wallets out there floating around, and I had no other choice but to have those 10 other cryptocurrency wallets. I'm hoping at one point in the future, we will get to a place where I only have one. I know there's a couple that are standard. Will you support other cryptocurrencies at some point?
Forrest: I think we'll consider all options going forward, but right now we're really working hard to support our tokens and make sure our tokens have a great first class experience on that.
Berlind: Okay. Perfect. You're here at World Economic Forum in Davos.
Berlind: What are you hoping to accomplish while you're here?
Forrest: We want to basically make it easier for people to move money around the world and to feel good about it. And we want to interact with countries and talk to their finance departments and just like, "Hey, we have a stablecoin."
Berlind: When you say their financial department, you mean their central banks and stuff like that?
Berlind: Yeah, yeah.
Forrest: And just try to develop partnerships with different countries around the world and different companies around the world that do global commerce.
Berlind: So when you're talking to some other country, the central bank of that country, you're trying to work on how do we get to a point where people who are working with that fiat currency of that country can onboard onto your chain and your wallet?
Forrest: And how could they receive those tokens into their country?
Forrest: The remittance market is huge, and money flows across country, across border all the time.
Berlind: Remittance. I want to stop you. Our enterprise audience is just getting comfortable with blockchain on this. Unfortunately, you need a degree in international finance in addition to being an IT guy or something like that. It took me a long time to get through all this, but just so... what is remittance? So they understand where that fits into this whole conversation of blockchain and cryptocurrency.
Forrest: I think, an easy way of looking at it, it's basically money going from a wealthy nation to citizens of a less prosperous nation. And so if you have someone who's moved to the US from a country, they're sending money back home, that's a remittance. But often it's very high fees, it's hard to get to them, it takes a while.
Berlind: The remittance is the part where it gets exchanged back into the fiat of the country to where they're sending that money back to.
Forrest: Exactly. Yeah.
Berlind: Yeah. You hear a lot about remittance in the blockchain realm, you keep hearing it all the time, but to somebody who's been mostly talking about application servers and databases his entire life, I hear that term and I was like, "Okay, wait up, full stop. What's that?" And I think that a lot of our audience is going to go through the same thing.
Berlind: Well, Brady Forrest, head of business development for MobileCoin, thank you very much for joining us here in our studios in Davos.
Forrest: Hey, thanks for having me.
Berlind: Yeah, it was great to have you.
Forrest: Good to see you again.