Round 10
Winner
KometPay
by

Feel close to home

Budget request:  
*
WebsiteCode

Project Stage

Development

Category

Cross-Border Payments

Based in

USA (Miami) and Latin America; starting with Colombia.

Team size

Active since

February, 2022
Products & Services

Our product enables individuals in the US to send money to Latin America smoothly. We make sending money effortless for the user and provide a wide range of options for those in LatAm to receive: bank accounts, cash pickups, or save in dollars.

We are also the only platform in Latin America to integrate with WhatsApp to allow our receiving users to manage their funds.


Our aim is to reach 13,000 cash pickup locations in Colombia. This entails establishing partnerships with a ramified distribution of local businesses that are an essential part of our users’ lives: supermarkets, local tiendas, pharmacies, gas stations and pawnshops.

Existing digital remittance platforms often offer some benefits at the expense of others. We have spoken directly to recipients in Colombia to understand their pain points and incorporate as much as we can to our service while ensuring a smooth user experience.

Speed is a shared concern. Users complained about the tradeoff between fast payments and high fees. Building on Stellar made even more sense in this context to ensure fast and cheap payments.

Another pain point for customers using digital apps is the convoluted process to send money. Digital remittance apps are built on existing banking rails and mimic the process of sending a bank transfer. KometPay removes the hassle. We enable users to send money with just the recipient’s phone number and we take care of the rest.

We want to widen our reach and allow anyone to benefit from the blockchain efficiencies. We enable recipients in Latin America to receive and manage their money through WhatsApp, even if they don’t have a KometPay app. We take seriously our mission to make sending money abroad just like texting.

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Previous Project(s)
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Progress so far

We are in the prototyping stage. We are three co-founders working with a team of two engineers to build a beta version that will be tested with at least 100 selected users. KometPay beta will work between Florida, NYC and Colombia, offering transfers from a KometPay account to a Colombian bank account.

We have already secured key partnerships: Anclap and Circle as our partner anchors connecting KometPay to the existing banking rails; We partnered with SuperEfectivo to offer cash pickups at any of their 113 pawn shops in Colombia’s caribbean coast; and with Petromil to initially cover 35 of its 435 gas stations.


We have not received funding. The company expenses so far have been covered by the three co-founders’ personal savings.


Legal

  • Incorporated company in US (March 2022)
  • Started process to register as MSB with the FinCEN (April 2022)
  • Started process to register with the Superintendence of Finance in Colombia
  • Started process to register the KometPay brand in Colombia


Product

  • Coded and tested blockchain rail for multi-currency transactions
  • Onboarded engineering team to work on app


Operations

  • Started onboarding process with anchors: USDC (Circle) and COP (Anclap)
  • Signed agreement with Superefectivo to partner for cash pickups (113 pawn shops)
  • Started formal process to partner with Petromil for cash pickups (trial in 35 of its 430 gas stations)
Goals

Our plan for the upcoming six months will be executed in simultaneous phases:

Regulatory (by June 2022)

  • Obtain MSB license from FinCEN
  • Obtain MSB license in Florida and New York
  • Complete registration with the Superintendence of Finance  


Beta (by August 2022)

  • Complete a beta version of the MVP to test the blockchain and on/off ramps connecting to the local banking system.
  • We need to complete the front end for the app. To do so we have onboarded a team of two engineers who are working on the development of our product.
  • We will run a beta version of our app with a selected sample of 100-150 users.
  • At least 50% of these users have been personally approached while conducting primary market research.
  • We have also partnered with three companies employing Colombians in Florida for our beta.
  • A reduced sample will allow us to keep track of user feedback and make necessary updates swiftly.


Launch (by October 2022)

  • We will launch to the market after completion of our beta.  
  • Our MVP will allow transfer from KometPay to a bank account in Colombia and the option to store the received amount in dollars.
  • We will also enable our users to cash out at Superefectivo, a network of 113 pawn shops.  


Funding (by October 2022)

  • Raise pre-seed funding with angel investors


KometPay 1.2 (by December 2022)

  • We aim to have integrated our platform with WhatsApp. This will enable us to capture a wider user base.
  • We also aim to have signed with two other partners to extend our cash pickup location to 600 locations in Colombia.  
To get there, we  will use our requested budget of  
*
  to:

Beta  ($22,000)

  • Team of two engineers for app development
  • 100-150 users for our beta testing: we are manually gathering these users through primary market research. So far, we have onboarded 11 individual users and have partnered with four companies totalling 53 users so far.
  • To onboard the remaining users, we are reaching out to companies including restaurants, cleaning and construction.  


Marketing ($5,000)

  • Launching campaign
  • Brand creation


Partnerships

  • We aim to cover 3,000 cash pickups in the next year; our roadmap includes:
  • Petromil: 35 of 435 gas stations
  • Terpel: in conversations to cover 400 of its 1200 gas stations


Legal: ($5,000)

  • Draft legal framework for regulatory bodies in Colombia
  • Draft T&C
  • Brand and tax registration
Overview

Problem & Solution

The remittances market is heavily reliant on the traditional banking system, which deems cross-border transfers costly and inefficient. Digital remittance market players have attempted to solve these inefficiencies at the expense of the users: they tend to overcomplicate the process of sending money and limit the recipients’ options to receive the money.  

KometPay uses blockchain technology to enable users to make fast, cheap and secure cross-border payments. We are on a mission to make sending money abroad as easy as texting; for this reason, we are integrating our app with WhatsApp so that our users can receive and manage their funds via the messaging platform. We also offer users a wide variety of cash pickup locations, from local tiendas to supermarkets and gas stations. We are building KometPay to become a fundamental part of our users’ lives, easily available in the places where they frequent the most.


How do you use Stellar in your solution?

We cannot think of a better use of Stellar than sending komets. KometPay is a cross-border payments wallet built on the Stellar blockchain. We use the Stellar network as the payment rail to enable remittance workers to send money abroad to Colombia. At KometPay we strongly believe in the Stellar ecosystem and its existing players to deliver financial interoperability. We have a shared mission to work towards financial inclusivity.

Stellar encompasses the perfect ecosystem to offer our users fast and cheap payments. We want the wider population to exploit the benefits blockchain has to offer, without the hassle that this new technology might entail. We integrate KometPay with WhatsApp, the widest messaging platform in LatAm.

This takes the Stellar network to the next level by reaching an otherwise uncatered population. Not only are we building a friendly interface to smooth our users’ experience, but are also enabling our receiving users to manage their funds via WhatsApp. The implications for Stellar are exponential, increasing the number of transactions on the network and making scalable use of the Stellar ecosystem.  


Stellar is crucial to us because it allows us to bridge the banking rail. Cross-border transactions occur in the blockchain and then integrate with the local banking rail. This reduces most of the red tape in an international transaction, making our user experience friendlier and simpler.


Target Market

KometPay will target users in the US and in Colombia. In the US our senders’ concentration is evenly spread in Florida and New York. In Colombia they are distributed mostly in Cali, Bogota and Medellin.

We are focusing on acquiring users in Florida and New York who send between $50-100 per transaction, and who suffer the most with the highest fees from the current competition.  These are Colombian workers with an annual salary range of $30,000-60,000 and working in either the service or sales and management occupations. We are initially narrowing our users to cater for employees of Colombian companies based in these two states.

Our beta will test the payment rail with three different user profiles:


Female population in service and sales occupations:

o   Gender: Female

o   Age: 28-50

o   Income: $25,000-30,000

o   Recurrency: $50-250 per week on average


Male population in constructions and sales occupations:

o   Gender: Male

o   Age: 33-50

o   Income: $25,000-50,000

o   Recurrency: $50-300 per week on average


Male and female population in sales or management office occupations

o   Gender: Male and female (65% males)

o   Age: 30-60

o   Income: $50,000-80,000

o   Recurrency: $50-350 per week on average

Our aim is to reach 100-150 beta users fitting this user profile. So far, we have onboarded 52 beta users: 12 individuals and the remaining through partnerships with four companies.


Revenue Model

KometPay’s revenue is generated on transactions fees charged to customers and foreign exchange spreads between the rate offered to customers and the foreign exchange agreed with the anchor based on the currency’s liquidity pool. The revenue is realized when the user makes a transaction.


Transaction fees vary based on the funding method a customer chooses (ACH, credit card, debit card, wire) and the delivery method.

KometPay is pre-revenue. We have not yet raised any capital and our expenses have been covered by the founders personal savings. Our aim is to launch in August with at least 100 beta users sending money from the US to a Colombian bank account via KometPay.


We forecast a monthly growth of 30% in our user base with an average amount of $500 per transaction. By December 2023 we will have reached a sending volume of $14.2 million, which translates into $583,000 revenue for KometPay. This also means that we will achieve profitability within 18 months of operation. Details of our financial plan and forecast are detailed in the attached spreadsheet.  


Industry and Market Research

In 2021, the transaction volume from high to medium and low income economies reached $589 billion. Transaction volume to LatAm reached $126 billion, and to Colombia $8.59 billion. LatAm has been the fastest growing region during the past five years, with an average yearly growth of 8.8%. Colombia has surpassed this trend reaching an average yearly growth of 11%.

The Colombian market is ideal to launch our service: over 50% of the remittances received come from the United States; half of these are distributed between Florida and New York. In Colombia, the recipients are concentrated in three cities: Cali, Bogota and Medellin. This indicates an addressable market of $2.23 billion between Florida and New York to Colombia. And $900 million sent from services and sales workers in the two states - which is our initial targeted market.

The average fees to send money from the US to Colombia are 4.5%. However, fees are most taxing on those who send the least, reaching up to 15% with traditional market players.

We have collected valuable insights from senders and recipients to understand their pain points in the process of moving money internationally. A common concern for users is safety. This is what usually drives their decision to use a traditional brick and mortar business despite the increasing fees. Maritza, a 60 year-old Uber driver acknowledges that she is willing to pay $60 to guarantee her money will arrive safely. “For me it is very important to communicate with someone to make sure I will get the money in Colombia.”

Another shared concern is how easy it is to send money. Maritza can do this via the phone with a sales assistant. She transfers the money to their account and they take care of the rest. Luis, another Uber driver, complained that sending money through money sending apps can often get as complicated as using a bank: “too many steps and forms.” Carlos, a 36-year old sales manager, said ideally he should be able to send money in three steps.

To send money to a bank account in Colombia from a foreign account, the recipient must register the account with the bank. Nicolás, one of our co-founders, Colombian himself, has been trying to send money to his bank account in Colombia using at least three digital platforms. All three mimic international bank transactions and require the recipient to get in touch with the bank to authorize international receipts. This makes the process even more tedious.

Rosario, a 51 year-old sales assistant, was particularly concerned with speed. She said there is always a tradeoff between time and cost. She often sends money to cover emergency expenses and is always on a disadvantage.



Threats and opportunities

1. Regulatory: LatAm and especially Colombia’s approach to regulate the crypto environment has been particularly slow. This does not make crypto-related business inoperable but does hinder potential relations with banks and other businesses.


     We are working with lawyers in Colombia to draft a legal concept to protect KometPay against any potential regulatory drawbacks. Granted there are no licenses to obtain in Colombia, this document will provide a clear structure to operate.


2. Market concentration: the remittance market is a competitive market, making it hard for new businesses to compete on pricing alone. Existing users have been using traditional MSB for a long time, and have gotten used to the sense of reliability these offer.


3. Another threat is the stability of the crypto market. Recent events have shown the vulnerability of some stablecoins which, if spilled over other assets, might negatively affect KometPay’s business. We understand that Stellar requires issued assets to be backed 1-1 by real fiat currency, and this certainly helps to protect the ecosystem. Yet, we consider the development of these events important for the legacy of the wider crypto and blockchain networks.


Competition

The US-Colombia remittance corridor is served by traditional brick and mortar shops and digital platforms.

1. Small World

o   Receive money via bank or account or in cash pickup

o   Most competitive exchange rate (1.1%)

o   Near instant transfers

o   Only one partner for pickups in Colombia

o   Fees increase per amount ranges

2. Remitly

o   Receive money via bank or account or in cash pickup

o   Exchange rate (1.75-2%)

o   Wide network partnerships for cash pickups

o   Up to 5 days

o   Flat $4 fees

3. World Remit

o   Receive money via bank or account or in cash pickup

o   Exchange rate (3.2%)

o   Wide network partnerships for cash pickups

o   Near instant

4. MoneyGram

o   Receive money via bank or account or in cash pickup

o   Exchange rate (3.5%)

o   Wide coverage for cash pickups

o   Up to 5 days

5. Western Union

o   Cash pickup and bank account

o   Exchange rate (3-10% depending on payment method)

o   Fee according to transfer amount (min $5)

o   Wide coverage for cash pickups

o   Up to one day


Marketing and Sales

At this stage of KometPay’s development we distinguish two macro-marketing strategies: one for the beta and one for post-beta. We have already been gathering users for the beta and it’s crucial for us that their profiles match the end user’s profile of our platform. We have been meeting and signing up beta users including: cleaning ladies, salespersons, uber drivers, waiter/waitress, and managers of small local shops.


The purpose of our beta is twofold: to make sure the technical features of our platform work smoothly, and to gather constant user feedback to craft our service around and with the people that will be using it. Implementing the beta users’ feedback will be an essential step to make sure the communities we are targeting become loyal and happy customers of KometPay.


We have onboarded our beta users through our partners, which are Colombian businesses with Colombian employees, or through reaching out to Colombian communities in Florida and approaching our targeted customers directly, explaining what we do, how we work and getting them to sign up. This has proven useful also to gather primary market data on our customers. We have reached over half of our user base for the beta in under three weeks and we are confident that before the beta begins (August 2022) we will get the remaining.


Once the beta is launched we will focus our wider marketing strategy to target senders and recipients. The senders’ profiles are: uber/cab drivers, cleaning ladies, construction workers, salespersons, small-shops managers, service workers. Our marketing strategy includes community engagement, local advertisement in neighborhoods with high concentration of Colombian immigrants and social networks.


The recipients’ profiles are people in Colombian with either a family member, business partners or friends working in the US and that receive money from them. We will narrow down our marketing strategy to demographics and locations. Therefore we will use radio ads (a major marketing tool in Colombia), KometPay stands in shopping malls distributing info-flyers, and also through social media (most popular in Colombia are facebook and instagram).


We are not afraid of implementing unscalable methods to acquire customers. KometPay strongly believes in developing personal connections with our users for which is crucial personally engaging them and constantly reaching out to our user base to get feedback.


Resources and Relationships

Our partners to date include Circle and Anclap for the on/off ramp rails. Our business is strictly dependent on ensuring a distributed ramification of local partners for cash pickup, aiming to reach 13,000 pickup locations in Colombia. The path to reaching this is not immediate, but we are constantly working to extend our availability to our users’ proximity. So far, we have secured a partnership with SuperEfectivo, a pawnshop with over 100 stores in Colombia, and are finalizing our agreement with Petromil, who have over 400 gas stations. This settles us with over 500 pickup locations to start with.


We want to increase the transaction volume on the Stellar network and a close relationship with Stellar is also in our priority.

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Links:

Team

Co-Founder

Paolo Astone

LinkedIn  | Discord: ​​paoloast#8042

Paolo is a co-founder of KometPay. Prior to building KometPay, he worked as a journalist for the Financial Times’ fDi magazine, where he closely monitored the development of investment in tech space in Africa and Latin America. Paolo also worked as an independent strategic consultant. Paolo obtained his bachelor’s degree from SOAS university in London.


Co-Founder

Nicolas Zuleta

LinkedIn | Discord: ​​nzuleta#0933

Nicolas is a co-founder of KometPay. Prior to starting this new venture, he worked as a consultant at Control Risks and Guidepost advising Fortune 500 companies to prevent fraud and to implement AML policies and compliance guidelines. He worked closely with regulatory authorities in Colombia and the Andean region to advance the regulatory space for new technologies. Nicolas obtained his bachelor’s degree from the London School of Economics.


Co-Founder

Alessandro Scaglia

LinkedIn  | Discord: ​​alescaglia#8491

Alessandro is a co-founder of KometPay. He has experience in data analytics working as a senior data analyst for BCG Gamma, where he has advised Fortune 500 companies to improve their operational capacity using blockchain technology. Alessandro obtained his engineering degree from University College London and his masters from MIT.