Kiwi startup to bridge crypto payments via Mastercard network

Until now, trading cryptocurrencies has been much easier than using them to buy groceries or a car, but a Kiwi company is hoping to change that.

Immersve, founded by technology entrepreneurs
Jerome Faury has partnered with Mastercard to provide a link between digital wallets and the card company that makes it possible to use crypto to pay online or in person at a store.

Faury is no stranger to crypto innovation. In 2020, his startup Centrapay made it possible to buy a coke from a vending machine with Bitcoin, came up with the idea 18 months ago.

“In 2017 I got into crypto payments and blockchain and I set up a company to enable crypto payments to be processed across the NZ retail network and coke machines.”

But he says he got a few things wrong.

“At that point, people didn’t want to use crypto — they wanted to buy more crypto.”

Cryptocurrency exchanges have sprung up all over the world in recent years to facilitate that.

But Faury said the focus has now shifted to using the digital assets.

“What’s happened recently is now you have this trillion dollar asset class and it’s much harder to use crypto and there’s been some bad actors – FTX, Celcisus, Voyager – that haven’t done the sector any favors.”

So 18 months ago he came up with the idea of ​​building a bridge between the digital wallets that connected directly into the Mastercard network, allowing people to use anywhere Mastercard is accepted.

The service will be launched in New Zealand in April and Immersve is aiming for a global rollout.

“We’re in the final stages of getting our license for Australia and we’ve started the process with North America, the UK, the EU and we’ve also started across South East Asia as well.”

Faury said he hoped to launch the service in Australia by June and expand to other markets by the end of this year.

How does it work?

Digital wallet holders must first convert their cryptocurrencies into USDC – a digital currency that is fully backed by US dollar assets and is known as a stablecoin. Stablecoins are designed to be stable rather than wildly fluctuating in value like other cryptocurrencies.

Faury said some tech workers were now paid in USDC, while others also received interest on cryptocurrency savings in USDC in the same way as the interest paid on a term deposit at the bank. Another option was to put cryptocurrency as collateral and get a loan that was lent in USDC.

USDC will then be converted to fiat currency and settled on Mastercard’s network. From a retailer’s or merchant’s perspective, it will look the same as any transaction made through Mastercard.

The digital wallet holder will have control over approving the purchase and will be able to set limits on how much can be withdrawn.

Faury said the bridge technology provided by Immersv was a world first.

“There’s nothing like it in the world – I haven’t come across any other company that even thinks about the idea let alone figuring out how to solve the challenges around the technology and the experience to make it elegant and simple.”

Faury said the service had a potential market of tens of millions of people.

“Obviously the challenge from a regulatory perspective for a company like ours looking to expand this into other markets is making sure we comply with local legislation – there are global standards around KYC [know your customer]AML/CTF [anti-money laundering, countering the financing of terrorism].

“Technically it works globally from day one, but to bring citizens of a particular country we have to comply with local legislation. The key to our success is getting the local licenses so we can bring citizens of those countries.”

What about fraud?

Faury said it did not hold a person’s cryptocurrency.

“If something happens to Immersve, nothing will happen to your cryptograph because it is in your wallet secured with your private key, and the only time it can be used is if you sign a transaction.”

He said the system used one-time virtual card numbers so people didn’t need to know their card number and if it was compromised from the website or otherwise, it wouldn’t work anywhere else.

Using the Mastercard network also meant that users had the usual protection of using a card service to be able to charge expenses if the product or service did not turn up.

Immersve earns its money through the intermediary fee.

“We’re the issuer of the card and we charge the acquirer – the acquirer is the entity that gives the merchant – the merchant – the ability to accept Mastercard – so that’s where we make our revenue.”

Immersve is 46.5 percent owned by Faury and its 28 employees are currently based in Auckland, but he said senior management would eventually be US-based, with the product development and innovation team based in New Zealand.

Last year, it raised $17 million through a seed round, attracting venture capital backing from the US and UK that valued the company at around $70 million.

Sandeep Malhotra, Mastercard’s executive vice president of products and innovation in Asia Pacific, said that over the past three years, the number of people using blockchain-based wallets has doubled to more than 80 million.

“Digital wallets will likely become as ubiquitous as email addresses. Mastercard remains committed to working with like-minded organizations like Immersve to scale and secure the blockchain ecosystem to make simple, secure cryptocurrency transactions, and even payments in the metaverse, easy available to billions of consumers.”