We're Thibaut and Théophile, and we wanted to hear your thoughts on a project that we would like to build: a user-owned online payment network powered by cryptocurrencies. We see this as the PayPal of the ownership economy . We'd like to build this because we think that online payments should be treated like a common good- they're a key part of global infrastructure.
Today, online shoppers want convenience: a checkout experience with limited friction, that's fast and easy. Online merchants want higher conversion rates- even if that means accepting PayPal and putting up with high fees and payment reconciliation. We think that this network could align the (divergent) interests of both shoppers and online merchants.
How would it work?
Again, this network would be similar to PayPal: members create an account online and use it for peer-to-peer payments and when they shop online. When a user creates an account, they "top it up" by transferring funds from their bank account to their payment network account. When shopping online, they can spend with the account at participating merchants.
The shoppers are the co-owners of the network, and merchants are the "clients"- they pay a small transactional fee (0.1%) for sales. Shoppers are incentivized to use the network as often as possible because they receive shares of the revenue coming in from these fees. Unlike cash back schemes, that reward individual purchases made by the shoppers themselves, this will reward all shoppers on the network for all transactions made within the network. The quantity of revenue that an individual shopper receives depends on their contribution to the network, in particular:
Keeping a minimum balance on their account when bootstrapping the network
The volume of transactions they make
To give an example, let's say Alice joins our network. She transfers funds from her bank account into her account on our network. She uses her account to purchase plane tickets at a participating online merchant and spends $1000. The merchant is charged 0.1% in transaction fees ($1 in this case). This fee will be instantaneously redistributed among all shoppers in the network but the amount of profit redistribution per shopper will be in accordance with the volume of their spending within the network.
What do cryptocurrencies have to do with it?
Cryptocurrencies and blockchain networks operate as infrastructure here and will be invisible to users.
Every account created is actually a non-custodial wallet. The rules for shopper remuneration will be implemented thanks to a set of Ethereum Layer2 smart contracts that will play an autonomous intermediary role between merchants and shoppers. The network will get a share of the revenue, similar to a reserve to fund for maintenance of the network.
The network will use interest-bearing stablecoin tokens. For those unfamiliar with the term, "stablecoins" are cryptocurrencies that are pegged to the market value of an external reference- say the US dollar or the price of gold- and are less volatile than other cryptocurrencies like bitcoin. They are used for transactions in the same way we use traditional currencies. Prices will be denominated in these tokens, but users will only see the traditional currencies (USD, EUR, GBP) displayed, no mention of cryptocurrencies.
We will partner with ramp services to provide onboarding to the payment network without having any fees incurred by the users as well as offramps for merchants who transfer funds from their account to their bank accounts. The interest-bearing stablecoin tokens are here to cover these fees and extra interest to be redistributed within the network.
What's in it for our users?
First off, the merchants. Thanks to our "under the hood" use of stablecoins and on/offramps, funds will hit the merchant's account immediately, and they can transfer these funds to their merchant bank accounts within 24 hours. Instead of paying 2-5% transactional fees on sales, the fees they would be paying would be significantly less expensive (0.1%). Plus, we think that a cooperative business model can create network effects and attract shoppers who are looking for our network to make payments.
For shoppers, we think that this could not only be a cool way to generate passive income, but also to participate in a business that is more equitable than other payment networks.
We're trying to build something that would be truly useful for both shoppers and online businesses. We'd like to know what you think of our idea. Would you want to open an account? Does this sound realistic? We'd love to hear your feedback!