Pundi X brings digital currencies to physical stores

The phenomenal surge in the value of cryptocurrencies last year, when prices rose by more than 900 percent before settling down this year, has made them a new speculative target in the financial world.

Despite the investment frenzy, however, Southeast Asia-focused payment technology startup Pundi X wants attention to be directed more to the digital currency's role as a currency, particularly its payment function, hoping to promote it as a payment option in daily life.

"Currently less than 1 percent of the world's population holds cryptocurrencies because the process of buying and holding cryptocurrencies is too complicated for the public," Zac Cheah, co-founder and chief executive of Pundi X, told EJ Insight in an interview.

Cheah said his company's mission is to allow the public to buy cryptocurrencies "as easy as buying a bottle of water".

He believes the industry can provide more practical application scenarios to enhance the circulation of cryptocurrencies in the market "so that holders not just simply save the cryptocurrency and wait for appreciation, or just speculate".

In 2017, Pundi X entered the Indonesian electronic payment market and launched the e-wallet application Pundi-Pundi, which allows users to scan the QR code in restaurants and retailers with their mobile phones to pay the bill.

According to the company, the product is now accepted by more than 600 merchants in Indonesia, with more than 100,000 registered users and about 20,000 daily active users.

Leveraging on its mass-market experience and vast network, the company introduced cryptocurrencies into the mainstream payment market.

Cheah said the Pundi X cryptocurrency payment system consists mainly of point-of-sale terminals, mobile device app, and physical stored-value cards.

The company's XPOS point-of-sale terminal for retailers supports cryptocurrencies, credit cards, as well as multiple e-wallet payment options. The merchant can choose either crypto or fiat currency to settle payments.

When a consumer pays through XPOS, the system converts the cryptocurrency in the consumer's e-wallet into local fiat currency before trading. For example, if a consumer chooses to pay Bitcoin to purchase an item worth US$100, XPOS will calculate the exchange rate in real time, and convert about 0.0293 percent of a bitcoin in the e-wallet into US$100 (the price of each bitcoin is US$3,415 at the time of writing), then pay the merchant for US$100 to complete the transaction.

Pundi X partners with cryptocurrency exchanges, which convert the cryptocurrency paid by the consumer into the local fiat currency in each X POS transaction; therefore the merchant receives the local currency and can avoid the trading risk due to price fluctuations of the cryptocurrency.

Cheah added that the user can also directly purchase cryptocurrencies through the XPOS device, and then store that in the user's cryptocurrency wallet or Pundi X's physical stored-value card XPASS.

All XPOS devices have built-in NFC (near field communication) and QR code payment functions, allowing users to quickly complete the transaction by placing the card near the device or scanning the QR code.

He said XPOS terminals are offered to merchants free of charge in order to boost adoption. Besides, for every cryptocurrency payment and transaction made by consumers using XPOS, a 1 percent fee will be charged as the revenue source for Pundi X and merchants.

This January, Pundi X completed its initial coin offering (ICO), raising about US$35 million. As the company wrote in its ICO white paper, part of the funds raised will be used to produce and promote its XPOS terminals.

Its goal is to have 100,000 XPOS terminals being used by merchants within three years. The company also plans to enter other overseas markets such as Malaysia, Singapore, and Japan, and expects its business network to cover all of Southeast Asia in three years.

In June, Pundi X entered Hong Kong through a partnership with local organic food restaurant chain FAMA Group, allowing customers to make purchases using various cryptocurrencies via Pundi X’s XPOS devices installed in the restaurants.

This September, Pundi X also partnered with Ultra Music Festival to bring its payment solutions to Ultra Taiwan, facilitating transactions for over 30,000 participants to pay for food and other merchandise in shops and restaurants at the venue where XPOS devices were installed.

Adoption of cryptocurrencies is becoming increasingly popular in the region. However, authorities remain wary about allowing cryptocurrencies as a payment method.

Last year, Indonesia's central bank banned payments in cryptocurrencies. In November this year, In Singapore, the central bank in November reportedly set up a framework to regulate the country's cryptocurrency payment services, requiring service providers to apply for a permit before they can operate there.

Asked about the regulatory risk, Cheah said the company has launched XPOS in a growing number of jurisdictions, including Brazil, Hong Kong, Singapore, South Korea, Taiwan, the Netherlands, and Nigeria.

"If local regulatory authority requires, we will apply for a license to provide the crypto payment service," Cheah said.

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BN/CG