What’s Happening in Payments Ep. 3: Veem’s Marwan Forzley on the role of blockchain in B2B payments
- Marwan Forzley, co-founder and CEO of Veem, joins me on the podcast today.
- We discuss the advantages of blockchain-based B2B payments, limitations, regulatory challenges, and what the future holds for the space.
Welcome back to What’s Happening in Payments. I’m your host Ismail Umar, and for today’s episode, I’m joined by Marwan Forzley, co-founder and CEO of Veem.
Veem is a San Francisco-based global payments platform built for businesses. It aims to simplify international money transfers and improve the way companies pay and get paid around the world. The company uses blockchain as a payment rail to eliminate the need for intermediary banks and reduce payment costs for SMBs.
Marwan is an advocate of using blockchain technology to make cross-border payments for businesses – and that’s what he’s here to discuss with me today.
The vision behind Veem
I started Veem in 2014. Before that, I used to run ecommerce for Western Union. And prior to that, I was in a startup called eBillme that I founded and sold to Western Union.
I started Veem to make it really simple for businesses to pay and get paid. When you buy coffee in the morning, you don’t think of how you pay – you just do it. When you do payments for businesses, it’s the opposite of that. It’s all about checks and wires, international wires, domestic wires, and paper invoices.
And so, we wanted to streamline this whole thing and make it really simple for businesses to move money around. And the way Veem works is, all you need to do is put an email and amount, and you can send money just like the way a consumer product works. We’re taking that chapter and moving it into an SMB setting. That’s why we created Veem.
Advantages of using blockchain for B2B payments
Fundamentally, blockchain is a way to remove intermediaries in a value chain. And what we do with that technology at Veem is, we use it to essentially cross from one currency to another. So, for example, if I’m sending money to Mexico, what we do is we cross from the US dollar to crypto, and then back to Pesos. We use crypto and its underlying technology, which is the blockchain, to synthetically cross from one currency to another.
The reason why you want to do that is if you look at the way money moves through traditional banking infrastructure, it moves from a bank to a bank to a bank to a bank. The more banks in the middle, the more fees, the more delays, and the longer it takes. The business ends up paying for all this – it ends up paying for the delays and for the friction that happens along the way.
When you remove intermediaries, you’re essentially removing the middle banks. And you’re going from bank to bank directly. And so, what we do is essentially remove the middle layers by inserting the blockchain to deliver the payment in a simpler way, in real time. And the transactions happen 24/7 – you don’t need to worry about banking hours in that market. And since the blockchain is distributed through agents or exchanges, the exchange in each country essentially becomes the last mile delivery. So you end up with a distributed architecture for payment processing.
These are the benefits of using blockchain and how we apply them at Veem.
The biggest issue with using blockchain for payments is just the need for more liquidity in the market. That’s the fundamental issue. The more liquidity that exists, the lower the bid-ask spread, the tighter the exchanges, and the more traffic you have on the network, which creates an advantage for blockchain against existing payment methods or existing rails.
At Veem, we have something called multi-rail, which basically scans between different rails to figure out what’s the best way to deliver a payment from point A to point B. In some cases, the blockchain offers an advantage, and in other cases it doesn’t. And when you look into why not, the main issue is liquidity. There isn’t enough traffic on the network to make it attractive against existing rails.
And to address that, you know, it just takes time. It takes overall maturity of the industry. And it’s been improving with almost every quarter. But the broader issue here in the market is making sure that there’s enough traffic, enough liquidity to make this become one of the main protocols, one of the main rails.
The need for more regulation
From a regulation perspective, as long as you adhere to the standards used to run a payment system, you’re good. And that’s what we do at Veem. We’re a money service business, we have licenses in every US state, and we have to follow all the required procedures that the state and the federal government requires. We follow the required procedures in other countries, too.
And so, when you follow these processes, you are by default operating in a legal construct using a new technology, where the new technology is essentially used as a plumbing, as a way to move payments behind the scenes from one party to another.
So I’d say, the more we see regulatory frameworks develop, the better the market is going to be. Because generally, when you have a system that’s regulated, you have all the big banks and the big platforms apply their assets to it, which creates more traffic, more liquidity, and a better environment overall. So I’d like to see the government regulate the industry. In the meantime, what we do is, we apply the regulatory framework that exists for money service businesses over this medium. That’s how we do it today.
Market volatility and the future of blockchain-based payments
The volatility of cryptocurrencies is not prohibitive for us, but it’s also not helpful for using crypto as a payment processing vehicle. I mean, we use it with all its volatility because we go in and out of the blockchain. And we’ve been doing this for a while, so we’ve developed all the processes and technology to do it. But you know, it’s much better when the market is less volatile.
It’s a young environment – folks are still discovering the technology, learning how to use it, and there are different perspectives emerging in the market on its future. Some are very bullish, some are very bearish. And so, it creates an environment where you’ve got big swings depending on various factors.
But in general, I would say that the foundations of the blockchain as a protocol are solid, the market is emerging and maturing, the attention it’s getting is helpful, and the amount of money pouring in to develop it is extremely helpful to make it a big rail down the road. It’s going to be one of the major technologies in the market. It’s just a matter of time, more than anything else.
The role of stablecoins
Stablecoins are a variation of the foundation built on the blockchain, and just from the name, you know, they’re stable. And because they’re stable, they could be helpful. But again, the issue with stablecoins is very similar to the issue with any of the cryptocurrencies that we use for payment processing. You need to make sure that there’s enough liquidity in the market, enough exchanges supporting it, and have the exchanges be able to essentially take the coin, turn it into local currency, remit the local currency to the recipient, and have these operations be rugged and scalable. That’s what needs to happen for this technology to become the way to move money around the world.
Veem’s future plans
We’re in 110 countries so far, and we work with about 80 currencies. There are around half a million accounts on the platform, and we’re looking to scale and grow the business further. It’s all about meeting the customer’s payment needs, so that whether the payment is domestic or international, they’re able to use Veem to simplify paying and getting paid, and we want to scale the platform and get it to a stage where a lot more users are using it. That’s the key objective for us.