When a bank or credit union wants to offer debit cards or credit cards, it hires a “issuing processor” to help. They sign up with an acquiring processor when they want to give merchants the ability to accept cards.
But when it comes to cross-border payments and international money transfers in general, banks have had far fewer options. Industry veteran Gary Palmer saw this as an opportunity.
In 2018, he started Payall, a company that helps banks send and receive money across borders. Palmer says that the Miami-based startup has made “very specialized” software that allows banks to give their own customers the ability to make payments across borders.
Palmer said, “If a bank has a client who pays thousands of people all over the world, it’s almost impossible to do that through a bank today.” “We’ve made it easy by making the UI and APIs.”
Then, those businesses can use computers to make the process go faster.
“Our real goal is to make sure that cross-border payments are safe and sound. And I can’t stress that enough, because regulators and compliance officers see this category as high risk,” Palmer told TechCrunch.
In fact, the COVID-19 pandemic is making more people around the world work from home. This makes it more important than ever for banks to offer cross-border payments for businesses and individuals.
And that’s exactly what made Anish Acharya, a general partner at Andreessen Horowitz (a16z), decide to lead Payall’s new $10 million seed round by putting in $8 million.
In its work on “default global,” the company ran into this problem. Banks really want to make it easier for money to move across borders, especially since the world is becoming more global.
Acharya told TechCrunch, “We’ve been looking everywhere and came across Gary because he’s one of the few people who has real experience building payment processors.” “One of the most important things we learned is that cross-border payments are more of a compliance problem than a money movement problem. And Gary agreed with the same point.”
Payall is different from other cross-border payment startups because instead of competing with banks, it works with them by letting them use its software under their own brand name.
Palmer says that this software lets clearing institutions “know their customer’s customer” and feel more confident about doing the transactions. Right now, the institutions may be hesitant to do the transactions because they don’t know who the foreign bank’s customer is.
Palmer told TechCrunch, “We want to make sure that the product is open to everyone and that banks can deliver money efficiently to anyone on the planet, even if they don’t have a bank account, in near real time and at a fraction of the cost of a bank’s normal cross-border product.”
The people who are getting the money can choose how to get it. They can get it in their digital wallets, on prepaid cards, or in their bank accounts.
Payall has already raised $8.2 million through pre-seed funding and SAFE financings.
Acharya, who helps lead a16z’s fintech team, thinks that Payall is a good example of why “banks are here to stay.”
“In some places, internet companies do better than banks, and banks do better in other places. And they already have a relationship with a lot of small customers, especially those who are overseas. So it’s more about helping them offer these features than necessarily trying to compete with them,” he told TechCrunch.
