Hi Tim. Can you tell us about your background and your company, Payment Rails?
I’m an Australian. I moved to Canada in 2009 following a five-year stint in London, UK. I’ve been in the payments industry for the past six years, previously working for an e-wallet competitor of PayPal, where I headed up the operations teams supporting millions of users sending payments across 190 countries.
In mid-2015, I co-founded Payment Rails with Ferhan Patel, another payments industry veteran. We experienced first-hand the difficulties and high costs of paying contractor workers internationally, and we set out to fix that. At its core, we’re building the most powerful payout API for businesses to send payments globally. On top of that, we’ve built a user-friendly dashboard for businesses of all sizes to easily send payments at a much lower cost than through their bank.
What is your current funding strategy?
We’ve bootstrapped the business with our own funds. We’re absolutely convinced in the market demand for this product. We are planning to raise a seed round of funding in the coming months, so we can scale the business to the next level.
The payments sector has become more competitive in recent times. What is Payment Rails’ unfair advantage?
We have seen competition in many sub-sectors of the payments space lately. In P2P remittances, we see very tough competition. There have been countless e-wallets launched. And in credit card processing, we see strong competition and niche players surfacing, such as those focusing on subscriptions. However, we believe there’s a huge opportunity still underserved in the business payments space. The cross-border payments market is expected to grow to $54tn by 2022 – it’s a very fragmented market with no standout leaders who are solving the real pain points for most businesses. We see a great opportunity there.
Your target market includes freelancers, ad networks and crowdfunders, among others. What made your team decide to pursue such a wide range of potential clients?
These segments all have something in common: they all need to pay on-demand workers who are connecting on their platform or marketplace. These businesses all have similar needs and challenges when making payouts, and that’s why we’re targeting those segments with our mass payout API solution.
We believe very strongly in the future of the on-demand economy. There will be over 500 million freelance workers worldwide by 2025, and our vision is to be the best way for businesses and platforms to pay their global on-demand workforce.
Payment Rails is a member of two Canadian tech hubs: MaRs (Toronto) and FCP fintech Studio (Montreal). What has been the experience working with such entities so far?
We moved our team into FCP Fintech Studio 10 months ago, and we haven’t regretted that decision for a moment. Jay and Dominique Ferst and the rest of the FCP team have been incredibly supportive of our business, and it has been a rewarding experience working alongside other Canadian fintech startups building companies under the same roof. I encourage all Montreal fintech startups to connect with the FCP team.
MaRS in Toronto is a really well organised startup ecosystem, and they too have been very supportive of us. Adam, Dinero, Alex and the MaRS team are always ready to help out in any way they can. We recently joined their Venture Growth programme and are looking forward to working even closer with the MaRS team.
The fintech industry is growing in Canada, that being said many entrepreneurs in this ecosystem mention an unfavourable regulatory environment. What could federal and provincial regulators do to address those concerns?
I believe Canada has an incredible opportunity in the next few years to step up as a fintech hub on the world stage, alongside the UK and Singapore. While Canada has been known as having the soundest banking system in the world for many years, which is a strength, this has had an impact on innovation and competition to the detriment of Canadian consumers and businesses. More regulatory balance is needed to create the environment for financial innovation to thrive.
Canada should implement a regulatory sandbox, following the model of the UK, Australia, and soon Singapore. A sandbox will allow early-stage fintech businesses to launch an MVP and operate in a very controlled and limited way. It will help them fully understand and work towards being compliant with the rules before going to market. It would also better prepare them, many of which are Money Service Businesses (MSBs), to open bank accounts with the incumbent banks. Building strong links between a regulatory sandbox and the existing banks would be important to its success.
What’s next for Payment Rails in 2017?
We are stoked to announce our beta launch last week! We’ve had overwhelming interest in our platform so far, which is incredibly encouraging, and we’re working towards a full open launch soon. We also have some really exciting services we will be releasing in the coming months, many involving instant payouts, so watch out for that.
READ NEXT: Top 5 payments predictions for 2017