In terms of money, times are changing in Australia. Finally the Mint has come to terms with the fact that the five cent coin is pretty much utterly useless and non-profitable, as it costs more money to make than it’s actually worth. While these changes to our physical currency show our economy is moving forward, changes in the digital currency space are happening more rapidly to challenge our perspective on paper notes and gold coins.
Bitcoin is an innovative online payment network that first came to market in 2009. It has achieved huge success in the United States and Europe, having been recognised as a legitimate financial service. Bitcoin relies on blockchain technology, a shared public ledger that helps calculate and confirm transactions around the world.
In Australia the blockchain space is rather a little untouched in the sense that more and more countries are jumping on the bandwagon, essentially leaving us behind. Australia is one of the most regulated economies in the world and geographically speaking we are also one of the most remote, so it makes sense for us to take advantage of digital currencies. The bitcoin system transfers virtual money online from one computer to another and is used by companies to bypass expensive transaction fees.
Earlier this year the Commonwealth Bank used blockchain technology called the R3 CEV and teamed up with 10 banks around the world to exchange value without the need for a centralised third party. With secure banks trialling digital currencies, the perception of this space is changing with more people wanting to adopt this method of money transaction.
Seeing that the time is right to jump into this space, students from the University of New South Wales have developed their very own use for blockchain technology and created their very own fintech startup, Dime.
The startup is a currency exchange platform that facilitates the transfer between AU and Yuan. Through the use of cryptocurrencies like Bitcoin, transactions between AU and the Yuan can be completed at a much cheaper rate with a faster transaction time. For instance, instead of the normal 10 percent transaction charged by the banks, Dime transacts with a one percent rate and in minutes instead of the traditional four to six days.
“What we currently have on the market are things like MoneyGram, where you put your money in and you have to fill in all these forms to get your money. But this takes almost up to four to six days to arrive. So it takes a long time to arrive and they also take a huge cut of that money, and we think frankly that’s ridiculous,” explained Stefan Qin, cofounder of Dime.
The startup was born out of UNSW’s Startup Launch program, which saw students develop and produce their own innovative tech ideas over a 20 day period. Dime were announced as the winners of pitch night and took home $3,500 in seed funding.
Dime wants to initially target its technology at the Chinese student market and then eventually expand to the average Australian consumer as a whole. The service is aimed primarily towards international Chinese students to help them either pay their school fees or exchange money from their Chinese bank account to their Australian bank account.
“The timing is exactly right to jump on that bandwagon to enter the market as a blockchain specialist company, meaning that all the big banks are getting on board with the blockchain technology. The government regulations might be a bit more okay with block chain in a sense and we’re just finding that the timing right now is right to get on board that train in a sense,” Qin said.
Dime is still at the rudimentary stage of development but for the future the team envisions the service will work in conjunction with a student’s bank account. Qin explained students will login to Dime and link their bank account and add in the details of the receiver they want to send to.
For the second step, users will enter the amount of money they want to exchange and an exchange box will display how much money will be received and also how much money will be saved, compared to other transaction systems. On clicking exchange, within half an hour money will be transacted, given that the other bank account holds both currencies of AU and Yuan.
Currently Dime is only offering exchange between AU and Yuan, however Qin believes later down the track there will be other currency exchange possibilities.
Qin said he wants to make this process as easy as possible for Dime to become a household name. To do this Dime will look to integrate with mobile systems to make the process fast and easy and accessible to everyone.
In terms of monetisation, Dime will look to charge a one step fee for the average consumer under the transaction value of $10,000. This fee will basically add up to one percent of the exchange rate, saving customers around ten percent if they were looking to transact, for example, with the Commonwealth Bank.
“A one percent revenue model is a win win for both parties and obviously as I said, that’s flexible so we’ll base that depending on consumer feedback but right now we think that’s reasonable and we think it’s win win situation,” said Qin.
Qin also explained that the reason why Dime’s services will be offered to Chinese students first is due to the startup’s finding that Chinese students suffer the most when they’re exchanging money.
“The fact is, they exchange money a lot but they’re largely forgotten in the grand scheme of things because Chinese students are just seen as money makers for the universities, for example. So that’s a controversial issue and another ball game but basically that was what we found, it was a huge issue for them, so we were targeting the most desperate of the most desperate users which was Chinese students,” Qin said.
Qin added that he has personal experience in this market. Coming from a Chinese background and having completed work experience for a bitcoin company in China, he is well placed to bring such concepts and innovative ideas into the Australian market.
For global expansion Dime already has the Philippines in its sights. Behind China and India, the Philippines is one of the biggest remittance traders in the world, meaning it too is suffering from high transaction fees. Qin said Dime will also be looking to trade with the US dollar and the pound, however for now all focus is on the Chinese market and gaining a remittance license.
A remittance license can be quite pricey and cost from anywhere between zero to $100,000, depending on the amount of money transacted.
“If we want to become a viable, scalable business we’ll definitely have to get a large amount of funding so about a $100,000 or so just for the remittance license,” said Qin.
Dime will be working towards getting this license and through more funding will look to hire more front end developers with experience in security and financial systems. Currently Dime is still riding the wave from its win at Startup Launch and is meeting with H2 Adventures and Intellectual Property Ventures to gain further insights into the fintech industry space and move forward with developments.
Image: Dime Team. Source: Supplied