Wedding, stag and hen season is gathering momentum and with it the number of complicated IOUs to friends for shared suppers, rooms, hungover Burger Kings and petrol tanks is only booming.
Despite moves from the banks, paying friends (or indeed anyone) is still a big pain point and one that is already being tackled head on by certain online services in specific verticals. One of the most obvious example is Uber’s fare split, which lets the person booking the cab invite other passengers to share the cost of a journey. Meanwhile in the hospitality and flat sharing spaces, apps like Flypay or Divvy and Splittable respectively are focusing on fixing bill splitting in a particular setting – in this case restaurants and flat shares.
Based in Boston and launching in the UK in April, Circle Pay wants to wants to take the hassle out of social payments by being the go-to social payments app for everything: from the Father’s Day present you bought with your sister to the bowling trip you went on with friends to the holiday you’re planning this summer. It lets users send and receive money without fees from existing bank accounts and cards. The small idea is putting an end to the headaches of money transfer between friends, the bigger picture is growing Circle into a global real-time money transfer network for social payments.
We sat down with Marieke Flament, the firm’s managing director for Europe, recently to talk about why Circle is different and how it envisages the future of money movement around the world.
“At Circle we believe money should work the way the internet works,” says Flament. “If you look today the internet is instant, free and global – there are no frontiers. Money does not work that way, it is completely fragmented, it is not cheap at all there is always someone taking a toll on your money and it is not fast. What we are working on is a social app that enables you to do that. You can send circle money to anyone in a free, fast and super fun way.”
Circle at a glance:
> Lets UK and US consumers send cross border payments with conversion between sterling and dollars without fees
> Euro and other currencies to follow
> Barclays is Circle’s commercial partner in the UK, enabling Circle users to hold sterling and make transfers to UK accounts
> Founded in 2013 as Circle Internet Financial, launched Circle Pay app in 2015
So how does it work? It’s like an instant messenger for payments. You can send cash to someone via your phone contacts list, and email or a bitcoin address – either from the Circle balance that you hold in the wallet or directly from a debit card. You can add a little message, picture or gif and then all the payments you make appear in on a home feed. You can also request money – say if you covered the bill for lunch or bought a group present for someone and need to collect contributions.
Once you’ve collected the money from everyone you can then opt to cash out the funds back into your bank account or choose to hold them in the wallet.
The Circle Pay app is part of the swelling growth of social payments figure-headed in the US by PayPal-owned Venmo and in Asia with services like WeChat both of which are operating as messaging-led money transfer apps. The firm says it wants to let people send money in the same way they share content and messages online.
Venmo processed $3.2 billion of total payments volume in Q1 alone this year, a number that is up 154% year-over-year and highlights the appetite for social payments it has harnessed in the US. Flament says the firm has proved mobile social payments works in the US, but Circle’s ambitions are to become a global social payments network and to flatten the hurdles to cross border payments.
“Venmo is a very interesting proposition – it cracked the millennial market, a user group which is not necessarily in synch with the traditional banking system,” says Flament. “They’re on their mobiles as soon as they wake up, they want something super easy and will trust those big internet brands faster than banks. Venmo showed that that works in the US. What will be interesting will be, now that it’s been acquired by PayPal what will happen to it.”
She says that while millennials are a target, Circle is aimed fundamentally at people who are very at ease with their phones. The firm’s growth marketing strategy is to go after existing communities such as campuses, teams, flat mates, travelling companions to drive network effect or “grow the circle”.
“We’re building a consumer internet company so what we need is volume,” says Flament. “There is no fee, you can send money for free so we are not making money. The vision is that we get volumes to a certain level because without that we cannot add extra products. At the moment we’re at the stage Facebook was at in the beginning.”
While the consumer payments market is big, the B2B payments space is even more lucrative especially when it comes to cross border. So will Circle look to enterprise? Not on the agenda right now.
“We’re getting asked more and more by businesses but it’s not where we want to go,” says Flament. “If you build a consumer product you could deviate and white label it, but then there is no Circle brand. What we are focusing on is building our brand and building the use case for p2p. At a later stage maybe we can think about businesses.”
Blockchain & melting borders
Circle is notable for using blockchain to allow customers to use pound sterling or dollars to contacts anywhere in the world without having to hold bitcoin. The firm has an e-money license with the Financial Conduct Authority in the UK, saying it is the first time the regulator has granted such permissions to a digital currency and cross border payments company using blockchain.
“The way we look at it, we want more people to participate in the ecosystem,” says Flament. “It’s similar to the internet when we first had Yahoo! and AOL – it’s better for the whole internet if people use different servers. When is the last time you sent an email cross border? We don’t even think that way. Money for some reason we still think about in that compartmentalised way.”
In a blog post on its UK launch, the firm said: “Part of making money work the way that the Internet works is overcoming the arcane, siloed systems of currencies and bank transfers that exist today, and making it work the same way that we send and receive email or browse the Web.
“If we’re in the United States and want to send you some value, and you’re in the United Kingdom, or Ireland or Spain, why can’t we just text you the value, just like sending you a photo or a message? And why does someone have to charge a toll on that exchange? Google doesn’t strip out a few lines of text from emails as a fee when we send email around the world. Why can’t money move around without these costs and time delays?”
Inititially positioned as a bitcoin exchange and wallet, the firm is now pitching itself more down the social payments line with bitcoin as an option.
“We started as a bitcoin wallet in 2013,” says Flament. “Getting regulatory approvals first in the US and then the UK took time. We’re at a stage in this industry where both sides need to educate each other. Tech companies, visionaries, entrepreneurs is like have the vision when it comes to things like blockchain, artificial intelligence and machine learning, but then how do we have a conversation with regulators and how do we actually understand what needs to happen for us to work in partnership.”
When the company raised USD9m back in 2013 is was touted as the biggest investment to date in a digital currency company and the USD50m it picked up last April makes it one of the best-funded bitcoin companies around.
Circle Internet was founded by Jeremy Allaire who founded and exited Brightcove and Sean Neville former principal scientist at Adobe who also worked at Brightcove. It has raised USD76m in funding from backers including Goldman Sachs, IDG Capital Partners, Breyer Capital, Accel Partners, General Catalyst Partners, Oak Investment Partners, Fenway Summer, Digital Currency Group and Pantera Capital.
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