The new generation of startups that aims to resolve transfrontier payments focuses on a cryptocurrency stablecoin-monets often anchored to actual currencies or other goods to help them maintain stable prices-to build solutions that work faster and often cheaper than classic financial rails . This trend is also guiding an increase in the interest of investors for Fintech.
The last development is Cedar Money, a startup based in the United States that recently closed $ 9.9 million in Seed funding from Global Fintech Qed investors with latex participation, NIV, Stellar and Wischoff Ventures.
Like many cross -border payment platforms that use Stablecoins, Cedar Money acts as a bridge. Companies and people transat using a Fiat based site, while Stablecoin transactions perform in the background. Cedar Money plans to reduce his payment infrastructures and face inefficiencies in international payments with this loan, he said.
These inefficiencies are particularly painful in Africa, where companies deal with higher transaction commissions and hidden costs in currency conversions due to added risk and labor costs with local banks. Banks are profit from the change of exchange rates, adding another level of expenditure. “If you look at the quick network, the commissions globally are about 2-3%, but in Africa they are much higher. It is even more creaking in places where people have less money, “the founder and CEO Benjy Feinberg told Techcrunch.
Feinberg founded Cedar Money in 2022 after almost a decade of the supplier of alternative funding. Before launching his latest company, he spent time identifying the next “big” opportunity in Fintech, definitively focusing on payments and blockchain.
While Stablecoins have fought to obtain traction in the United States due to limited use cases and competition with traditional systems such as dollar and swift, Feinberg has recognized a different reality in emerging markets.
The companies of Africa, the Middle East and South America need dollars to pay imports, even when they buy countries like China. In countries such as Nigeria or Argentina, obtaining dollars can be a fight due to weak local currencies such as Naira or Argentine weight.
Cedar Money was launched at the beginning of 2024, starting the operations in Nigeria, helping companies in the country to accept and send money to others globally. “You want to go to a place where you can solve a big problem and the adoption will be easier. That’s why we started in Africa, because the need is greater here, “said the CEO.
However, despite their popularity, Stablecoin platforms face limits that can influence their scale between the markets.
Feinberg, when he was asked, explained that during the construction of payment rails – convert the Fiat to Stablecoins, transfer them and convert back – it is demanding, it is not exactly innovative. According to him, the real difficulty and where cedar money is trying to excel is in the construction of the rails of conformity to meet the unique regulatory requirements of each country and the vast documentation of banks to guarantee legitimate transactions.
These requirements are particularly complicated in markets such as Africa, where infrastructure differences make apparently simple requests – how to provide a much more demanding road address.
Feinberg has argued that the winners in this space will be those who will be able to resize their operations globally while navigating complex compliance requirements, in particular in the underground regions.
“I would say that the biggest challenge is to educate banks in the developing world that the funds they are getting from the underdeveloped world are good. It’s a challenge, but we are doing it. ”
However, the United States are giving the tone to the favorable regulatory feeling towards digital resources that could alleviate compliance. Many interested parties in the sector believe that this event, combined with others such as the acquisition of Stablecoin Startup Bridge Strips, will not only cause a wider acceptance of Stablecoin payments, but also make banks and regulators globally and in emerging markets relax Their strong opinions on the adoption of Stablecoin.
This adoption is starting to remodel the panorama of global payments. The A16Z data and other sources clearly illustrate: in 2017, the volumes of Stablecoin transaction were negligible compared to traditional systems. Fast forward to today and Stablecoins have passed Mastercard, Paypal and Visa. In the second quarter of 2024, Stablecoins transactions reached $ 8.5 trillion in 1 billion transactions compared to $ 3.9 trillion volume in fifty times more transactions, according to an A16z rat.
Cedar Money, founded a year ago, elaborates tens of millions of monthly volume of transactions focusing on import and export activities that manage tangible goods such as rice and shoes, supported by invoices in good faith, an approach that simplifies the subscription for banks since Transactions involve a clear documentation and physical goods, according to Feinberg, who refused to share customer numbers.
The investor partner of the Qed Gbenga Ajayi, citing because the Global Fintech company has invested in Cedar Money, says that Fintech is “univocally positioned to deal with the inefficiencies of the global financial system”.
The Payment Company, which has 14 employees throughout Nigeria, the United States, Israel and Serbia, is the fourth investment focused on the Africa of Qed investors after Moniepoint, Precium and Health corrective.
Cedar Money joins a growing list of players such as Conduit and Caliza, which serve companies in emerging markets with payments based on Stablecoin. However, despite the growing relevance, reaching a market capitalization of $ 205 billion last year, Feinberg says that their collective share of international payments remains small, so the cedar money has no direct competition at this stage.
“Today, two thirds of international payments are through the corresponding banking network. The size of the largest Fiat innovators is probably 2-5% of the market. So if you are looking at this and you are saying, well, the two thirds are banks, 5% are the Fiat innovators and 0.01% are the Stablecoins boys. So your competition or your way to go is not necessarily competing with other players; It is only to find your little corner because the market is so large. “
