CFO Advice: Crypto & Blockchain in the receivables management industry

What is Blockchain?

Blockchain technology is known as the tech that underpins cryptocurrencies. Bitcoin, Ethereum, and all the other 4000 cryptocurrencies operate via blockchain, making it one of the most important recent innovations in finance. Blockchain is the first technology that allows us to create a sophisticated parallel system to modern finance. With cryptocurrency, you can transfer value to anyone with an internet connection. For example, I can send €1000 to someone in New Zealand who doesn’t have a bank account without going through any financial intermediaries. It’s easy to forget, but that’s a pretty incredible breakthrough!

Which digital currencies have you implemented for your receivables solution?

eCollect’s receivables management solution is a technological frontrunner in our industry . As a first step, in the first quarter of 2021, we have given our customers the opportunity to offset their existing receivables with crypto payments. We use the most popular cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) as well as Bitcoin Cash (BCH) and so-called stable coins such as USD Tether (USDT) and USD Coin (USDC). To simplify cross border payments, induce transparency and to optimise our database management, we want to take the next step, namely making our receivables management platform blockchain-ready, which will enable us to use individual “smart contracts” to define and monitor the receivables in our platform. The so called “smart contracts” in our industry can speed up financial transactions and simplify various financial procedures.

How can a fintech startup make use of blockchain?

Blockchain will help in the accurate transfer of information and the fulfilment of obligations of all parties involved. Since all the terms are fully visible to everyone, there is no room for error in financial transactions and the transparency of the transaction is maintained. Moreover, the ability to fractionalize — tokenize — receivables vehicles through the blockchain opens up the asset class to a whole new category of investors. Most receivables vehicles around the world are traded over-the-counter (OTC) and blockchain-based “securities tokens” can digitize and streamline the existing processes. The receivables markets comprise $100 trillion and have a daily trading volume of $100 billion. These numbers far surpass the global equity markets. I strongly believe that “tokenized receivables” offer a unique wealth of opportunities to unlock the potential of security tokens.

Would fintechs be the reason for the dawn of cash payments soon?

Cash has been around for so long, we might make a mistake by thinking it will be a part of our lives forever. If there’s one thing we know at eCollect , it’s that anything can change. With the increased demand for credit cards, a sharp rise in revolutionary invisible payment technology, and the halted use of cash transactions, it’s looking likelier than ever that coins and notes might become obsolete.

As an example, in Japan, credit card companies are running out of credit card numbers. Due to an increased demand for online payment options during the covid pandemic, along with the government’s point reward system to stop the country’s “addiction to cash”, Japan might have to add a 17th digit to their credit cards. The reducing of cash payments is already a global trend and the pandemic situation acted as a catalyst for this shift.

Has the pandemic influenced fintech payments?

eCollect is a frontrunner in providing cashless payments long before the covid pandemic. We were one of the first fintechs in our industry, and along the entire receivables management sector, to offer to our customers innovative payment methods such as Apple Pay and Google Pay, and regional-specific payment methods such as and WeChat Pay as well as credit card payments from the major players in the market.

The new wave of fintechs in the payments space are disrupting incumbents by replacing the outdated systems, which a surprisingly high number of traditional collection companies still use... Thanks to the power of open APIs in a forward-looking regulatory environment, and a lack of technical legacy constraints, fintechs have the speed, agility and technology to address current consumer and business needs.

For more information regarding automated receivables management: www.ecollect.org