Nanopay announced it will partner with banks, processors and accounting software companies to offer a B2B cross-border and domestic transfer service. The company hopes to cut into the substantial number of paper check-based transactions through its platform that digitizes fiat money to securely store it and transfer it instantly.
Canada’s debit network, Interac, is the only publicly-named partner so far. Its role in the collaboration will notably be to add cross-border capabilities to its e-Transfer P2P and B2B transfer services. Interac e-transfer will support settlement across different currencies for high-volume remittance corridors, such as between Canada and India. The partners also plan to expand the service to transfer from Canada to China and the United States.
Nanopay is working with Canada’s five largest banks on integration for the Interac e-Transfer cross-border service, said George Lee, product owner for B2B cross-border at Nanopay. “We’re also in a private beta trial for our own B2B cross-border service and aim to move to a public pilot in a few months’ time,” he said.
Interac is open to collaborating with Canadian and foreign fintechs to enhance its product offerings. In June 2018, Interac said it is working with international payments service provider Bambora to enable Canadians to use Interac Debit for e-commerce purchases from merchants domestically and cross-border. In November 2017, Interac, which already has an agreement with Western Union, partnered with MoneyGram to support payments sent through MoneyGram's service.
Nanopay, based in Toronto, targets rapidly growing international payment markets. In October 2016, Nanopay raised US$10 million in Series A funding from a group of investors including Goldman Sachs’ merchant banking division. In 2012, the Royal Canadian Mint commissioned cryptography expert David Everett to develop a digital version of the Canadian currency called MintChip. The asset transfer system provides users with cryptographically secure value stores, and was designed by the Royal Canadian Mint to comply with AML and KYC regulations — a contrast to the less regulated roots of bitcoin and other cryptocurrencies. Originally intended to be used as digital cash for low-value point-of-sale purchases and for P2P transfers, MintChip, was sold to Nanopay, a then retail payments technology provider, in January 2016 after a pilot.
“Our users’ funds are stored in what are effectively ‘safety deposit boxes’ on our system, and our clients’ money is held at trust accounts with our partner banks,” said Lee. “We leverage as many banking partners and networks as we can, and are in the final stages of onboarding our Indian banking partners. In Canada, we partner with Interac and with B2B payments service EFT Canada, and in Australia, India, the U.K. and Europe we use the local real-time fast payment rails. To use the Canada-India corridor as an example, our Indian receiving bank partners have Nostro accounts in Canada plus accounts in our name in India which are prefunded for outbound payments.”
Nicko van Someren, Nanopay’s chief security officer and cryptography expert, describes the company’s bank-to-bank transfer platform has several advantages over blockchain-based approaches. Cryptocurrency “backers make promises about transaction speeds and low costs, yet they tend to not deliver. Bitcoin costs $10 per transaction and it takes minutes. But, to change the world of payment processing, it needs to cost cents and take milliseconds, which is Nanopay’s aim.”, said van Someren.