Gossip About Gossip: Proof of Reserve – Addressing Stablecoin Uncertainty with WorldPay by FIS

Oh welcome to gossip about gossip. Powered by Hedera Hashgraph. In each episode, we'll cut through the hype of blockchain promises and explore real world examples of organizations creating the next generation of decentralized applications, which will bring trust back to the internet for us all. Hello everyone, and welcome to the latest episode of gossip about gossip. The podcast where we talk about real world applications of distributed ledger technology. My name is Zenobia Gods talk, and I'm the SVP of communications here at SeaWorld's labs, helping to grow the Hedera ecosystem. I am delighted to be joined by Nabil manji from Worldpay by his. Nabeel is the SVP and GM and head of crypto and Web3 at CES and an active member of the governing council. Hi, Nabil. How are you? Hey, Zenobia. I'm well, Thanks. Thanks so much for having me today. Absolutely it's our pleasure. Thank you for joining us. So this is a huge company, but it is behind the scenes. It's not something that consumers interact with every day. So can you tell our audience a little bit about who is this? Sure Yeah. So I always like to say that this is probably the largest company you've never heard of because as you say, we really sit-in the back end of the infrastructure for the financial system. So from a high level perspective, this has been around for just over 60 years. We've got about 75,000 employees around the world are going to do about $15 billion in revenue this year. And really what we do is provide the core infrastructure, software, business process, outsourcing and other services and products into the financial services ecosystem. And in particularly, we are in particular, we focus on banks, capital markets and merchants providing them with, again, all of that technology and infrastructure and software that they need to provide the consumer experience that they want to provide. So most folks are probably engaging with your technology in some way, shape or form, but they don't actually they don't know it or they don't see it. Is there anything that people might be surprised to learn about the company? Yeah, I think well, one is that we are actually the largest payment processor in the world. So if you ever have paid for a Netflix subscription or an Amazon Prime subscription or bought something from Walmart or Alibaba on Singles Day or whatever it might be, odds are you've probably used Fios to process one or more of those payments. All right. Very cool. I have probably done all of those things. So why did I decide to join the Hedera governing council? Yeah, great question. So, you know, as a large technology and infrastructure provider ourselves and particularly one that's focused on the financial services ecosystem, we always have our eye on up and coming disruptive technologies that could augment, enhance or disrupt the way we do business. And ever since, blockchain has been around one of the foremost industries or use cases that people talk about. Blockchain transforming is financial services. So from the early days, we've always known that blockchain was a technology that we needed to keep a close tab on and invested if we wanted to remain relevant over the long term time horizon. And I think Hedera in particular appealed to us because of the enterprise grade focus of the technology you're building, the governance structure you're building. And candidly, just some of the other names that had joined the governing council before us. So I think is we look to what are the potential blockchains and layer ones and kind of ecosystems that we want to keep the closest of tabs on and kind of build, test use cases on. I think Hedera checked a lot of the different boxes or criteria that we were looking at for the last few years. Fantastic and yeah, you're in great company on the governing council. Absolutely what are some of the things that you've learned since joining? Probably too much to list. I think what's been really interesting, you know, we joined three years ago. And so we've kind of seeing the evolution of the broader blockchain ecosystem over those three years. And I think what's been the most interesting learnings have just been candidly how our peers are thinking about things like NFTS, what are the use cases, do they make sense or is it all hype what our peers are thinking in terms of DeFi applications within their own industries and just honestly how people are deploying blockchain, the pace at which they're doing it. So I wouldn't say it's one specific aha moment that I've had or one specific example or use case that's blown me away. I think what's been interesting is just being able to observe again, particularly through the governing council and the blue chip names that are associated with hedera, how peers of fice across industries and across the globe are investing in and experimenting with the technology. Yeah, and it's an incredible sharing of knowledge. So we had Andy guest Wirth who chairs corp on a few weeks ago and he talked about some of the use cases that are shared there which are incredible. You all recently presented a use case to court around something called proof of reserve on Hedera. And for those of us who are not living this day to day, what is proof of reserve? Yeah, good question. It's quite a bourbon, you know. Yeah, Yeah. No, I do love bourbon, so I wish it was associated with bourbon. But no proof of reserves is something we came up with over the past year. And just for context, as a large or really the largest payments processor, as I mentioned earlier, one of the particular applications of blockchain that we've been paying a lot of attention to and actually investing in ourselves are stablecoins and the applications that stablecoins going to have to speed up payments, payments, cheaper, etc., particularly for large multinational companies who are operating across geographies, across currencies that may have different bank calendar schedules, business hours, schedules, et cetera. So we actually launched a product earlier this year where we are offering our clients around the world the ability to receive proceeds from their visa and Mastercard processing in stablecoin if they so choose. So instead of having to receive only Fiat currency and receive that currency according to the bank calendar and business hours in the countries that they're working with us and we can settle them stablecoins oftentimes more quickly and more cheaply and with a more flexible calendar now that that's all great and well. But one of the first things you read about if you were to Google stablecoins is, you know, a, everything that's gone on with kind of the algorithmic stablecoins over the last six months and in particular some of the challenges in that space. And then be how the transparency around reserves for certain stablecoins still maybe isn't exactly where the industry or certain participants in the industry would want it to be. And so for us, if this product is going to be successful, it was really important that we have the ability to instill some degree of trust or confidence that the stablecoins we had disbursed or sent to our clients were actually backed up or had been minted with actual Fiat currency and not created out of thin air or created based on some algorithm or whatever it might be. And so the use case that we're developing on and hope to bring to market this year is basically a what we're calling proof of reserves where we can get a for each transaction where we mint and send out stablecoins some sort of proof that we as Worldpay have actually provided the minting party, whether it's circle or Coinbase or Paxos or Binance or whatever stablecoin you're using that we had provided that party with the equivalent amount of Fiat to mint, the stablecoins that we minted and then sent to you our client. So basically it captures proof, whether it's through a bank transfer statement or wire transfer record or hash or whatever, and then stores that on Hedera as kind of a ever living immutable, irrefutable proof that, yes, when we sent you those stablecoins today or tomorrow or yesterday or whatever it was, there was actual Fiat currency that we had provided to the mentor when we did that. So there's no funny business going on here. It's, it's, it's, it's real money sitting behind that coin that you've got. Yeah and so the transparency of putting all of that on a public ledger, I think, especially to your point around all the things that have gone on around stablecoins, making sure that people feel confident. Yeah, it just gives that extra sense of comfort. And I think for us it's important because we're not only targeting crypto clients with this, like our client base is vastly non crypto natives if you talk about Worldpay globally. And so maybe some of the crypto native companies, they might be OK without that because they know how companies like Circle and Paxos and Binance operate. And you know, they're up to speed with the latest transparency or reports those companies put out. But if I'm talking to some retailer that doesn't know anything about crypto. And I'm trying to educate them on stablecoins, I want to make sure that they have that confidence. And this is just another tool in the arsenal to enable them to have that. That's great. So can you walk us through a little bit of what that use case looks like, what that solution looks like either today or sort of at full scale what you would hope it would look like. Yeah so the stablecoin settlement solution is actually, you know, somewhat straightforward, being honest. So right now we process transactions for clients all around the world in over 150 different currencies. And we give our clients the ability to receive payment in whatever settlement currency they want. So, for example, I as a merchant, I could accept payment in 150 currencies. But if I'm a. US company and I have to pay my employees in US dollars and my vendors in US dollars. Maybe I want all of that currency to be settled to me in US dollars. So that I don't need to then go out and trade 150 different currencies with my banks into US dollars. So we provide that as a foreign exchange service and all we've really done is added USDC as a stablecoin, as a settlement currency option. So now as a merchant or a client of worldpay, you can say, hey, worldpay, I want to receive some of my transactions or all of my transactions in USDC rather than USD or euro or GBP. Or maybe I want to receive some USD, some euro, some GBP and some USDC. So really, the merchant can configure whatever ratio they want that's fully within their control. They can do it dynamically and in real time. That functionality exists in our platform today, and all we do then is for the portions of the transactions, whether it's all their transactions or some percentage. We, when we send them their funds every day, take that percentage of that portion, convert it into USDC on their behalf directly with Circle at a very attractive wholesale rate with unlimited liquidity, which at the volumes we're transacting, the unlimited liquidity piece is absolutely key. And then send that onwards to the merchants. Usdc wallet of choice. So we are supporting USDC across hedera, polygon, solana, ethereum, whatever it might be. So that's really how it works. It's pretty much fully automated in the background. Again, the merchant can control how much they do or don't want in USDC. They can change that on a daily basis or in a real time basis actually, and use it for whatever purposes they have. And so it sounds like it can be used across the board, whether you're a very small merchant or you're a huge international company, correct? Yeah there's no size requirement or constraints. It's really up to the clients to receive settlement in whatever currency they like, of which USDC is now an option. Yeah, that's fantastic. You any? I think we've covered a lot. This is this is an amazing idea and we're excited to see this working on this. Any other benefits that you are already seeing for customers as they start to take a look at this or things that they're sort of surfacing that you may not have even thought of yet? Yeah, I think a couple of things. So, you know, one is the nice thing about stablecoins is it's basically taking an existing Fiat currency and making it a lot more efficient and cheap to transact with, but also making it available to transact with 24/7. So what we're seeing is improved working capital with some of our clients, reduced cost of paying vendors or transferring money between entities overnight, which actually can be quite costly for financial institutions that need to cover balances across their multinational landscape or multi currency landscape on a daily basis. So we're definitely seeing, I would say, some economic improvements, particularly with companies that are trying to maximize efficiency in the current economic environment from things like currency management and working capital. And then on the other side, I think we are really trying to play a role in bringing our clients who are non crypto natives into the crypto and Web3 and digital asset space. And I think stablecoins is kind of the easiest way to dip your toe in the water, so to speak. Conceptually they're fairly easy to understand. They're tied 1 to one with whatever your home currency is. You don't have to worry about things like volatility. And what does that mean from a tax perspective? What does that mean from an accounting perspective, etc.? From an efficiency standpoint? As I mentioned, there are plenty of chains out there, whether it's polygon, hedera, solana, etc., where the transaction fees are not egregious. So the economics make sense. And so I think we're seeing a lot of benefits with our clients, like I mentioned, who are familiar with stablecoins and are comfortable using them. But we're also seeing benefits as kind of using it as an educational tool to help bring some of our non crypto clients into the ecosystem. That's fantastic. Thank you for joining us today. Before we wrap up here, anything else you'd like to share, whether that's related to counsel, related to this use case, related to any other use cases, you might have bubbling up in your mind? And now I would just say high level. I think, you know, despite what's going on in the market, it's really exciting and interesting to me to continue to see, particularly in the financial services space, a lot of the large enterprises out there, whether they're consumer facing to be technology providers, financial services, regulated providers, whatever it might be, just continuing to invest. And I think, that sentiment in terms of long term bullishness on what blockchain. Technology, decentralized ledgers. Et cetera. Mean for the future of money movement is definitely a topic that I think despite the current crypto winter or whatever people are calling it hasn't really gone off the kind of speaking circuit or off the burner, so to speak. And so, you know, I'm proud of my company, FIS. We're continuing to invest and inspired by what I'm seeing again from enterprises in our industry continuing to invest as well. Yeah I mean, I think we oftentimes talk about the Gartner hype cycle, right? And when you get to that sort of trough of disillusionment is where the actual innovation and real world adoption happens. So it feels like that's happening. We are aggressively hiring too. So if anybody's listening to this and is interested in working at the world's largest fintech and deploying crypto and Web3 enabled products, we'd love to have a conversation as well. All right, that sounds like I throw that in there. Yeah where should they go if they're interested? Reach out to me, ping me on LinkedIn, drop me an email. Nabeel manji at Fisk global. We're again, always, always chatting and hiring. And, you know, if anything else or if nothing else excuse me, it's a chance to build a connection in the industry. Absolutely well, nabeel, Thank you so much for joining us. We hope that you will continue to keep us updated on your progress and we look forward to building. Absolutely Yeah. I think we're going to have an update prepared for the council meeting in Dubai. So we're looking forward to sharing more updates there. Fantastic fantastic. Thank you so much. Take care. Thank you. Bye