Cross-Border Payments in Emerging Markets: Why the Last Mile Is a Local Bank

We got StableDash Research powered by HopNow, and we have Brent from HopNow, cofounder, co CEO of the company. Brent, great to see you again. Big day for the StableDash HopNow relationship. Thanks for powering the last couple months of a lot of these conversations. We've talked with leaders from looking here, Morris, WalletConnect, Tempo, Cyclops, Sphere, Wintermutes, Etherfuse, many more who all came and talked about global payments, FX, cross border stuff.

And I I know most people haven't had the chance to dive into this pretty meaty report yet.

I think we we pushed publish on this as we as we've been live. So great to see you again. Get to they'll get to discover and then dive dive straight in. So, yeah, we're excited to see this come to life.

Yeah. Again, excited to be here. Thanks, to two of my favorite podcasters. So Zach and Drew, one of the things I also just wanna say is you guys did all these interviews. We sponsored all these interviews. Thank you for doing that, and thank you for all the interviewees, all these founders that spend quality time giving all the input and quotes and content for this report. It's all just gonna be super beneficial for everybody to read.

And, yeah, I think when we talked about it originally, Drew, we talked about in this age, there's a lot of people posting on LinkedIn. There's a lot of AI slop people like to say, but we took the different approach together with your guidance, right, as, hey. We wanted to do a more curated, thoughtful, deep dive in this space because a lot of people have questions. A lot of new entrants to Stablecoins and cross border payments just they they don't they need to get a lay of the land.

So, I'm confident that this is going to give them a piece and and get them in the right direction. And, yeah, that's exciting to talk about today.

Yeah. We'll we'll dive into this in a second. But one one quick, like, little fun fact. I don't know if you knew this, Brent. One of the guests, contributed to this report. He DM'd us shortly after. He goes, hey. One of the princes in, kind of, like, Saudi Arabia saw our podcast. I'm meeting with him next week, so thanks for coming on the show.

So I wanted to share that as kind of, like, a quick win to some of the power that that media can have, and you never you never know who's watching and how some of these relationships may may form over time. So Yeah. Yeah. Come on stable dash live. We hope you meet we hope you meet princess, apparently. So let's dive into this. First, Brent, I wanted to catch up before we go super deep into this port report. What's it been since HopNow? Because it feels like, you know, the space is moving moving faster than ever.

You've come on a stealth recently. You've raised it feels like ages since we were in Mexico City talking. How has your journey been since then at Hotmail?

Yeah. So we have focused most of our time on solving customer problems. We get a lot of conversations every day with customers. You know, maybe they met us on Stapledash. Maybe they've been in the industry a while. So we are leaders in the space, as I mentioned before, but I'll mention again is that I used to work at Coinbase. I used to work at Anchorage Digital Bank. I've been in the space for a while. I've been in financial technology and banking and payments for a long time.

So our network says, oh, how is how are you different? What are you doing different now than, you know, the company that have been doing this for a while? And I think one of the challenges in the space just you know, we have a global footprint, which I wanna talk about today and get kind of drilled down to the nuances of country specific, region specific, vertical specific. That's a lot of what people don't talk about.

They talk very high level of, like, oh, stable coins in the space, but they're not talking about the intricacies of each geographical complexity and the vertical in that geo and how to solve some of their problems. So I brought today you know, we could talk about some customer spotlight scenarios, but I think some of the themes that you'll read in the report is going back to, hey. We've got challenges here, and maybe it's in the last mile. Maybe it's in this different geo.

These are real type of conversations I have on a daily basis. And I think from a daily basis, we're we're ramping up in terms of the product offering. We've added, more products since we spoke. You know, we started off with FX and stable coin on and off ramp, where we provide a great service for treasury, kind of like a a tier one desk for, constant flows of stablecoin and, access to USDT, USDC, any stablecoin, any crypto, and then any FX or FX back and forth.

And that's a proven market on that stablecoins is helping with. And then our second product is the virtual bank accounts. So oftentimes when you have these conversations, it's, hey. Great. You can get me stablecoins. Now I'm gonna go use another vendor for banking, or and then I'm gonna use another vendor for credit cards or debit cards. I think what you're gonna see in this report is like, hey. There's no longer these point solutions. That's kind of been solved.

It's the companies that are offering a multitude of different options that allow those companies to grow and actually make money in this space is where you're gonna see success. So we've since you last talked to us, we've added the bank accounts for businesses where we're offering many different types of, like, for an example, an emerging market client that needs access to USD. We help them get a bank account, and that is the original thesis of this company is helping emerging markets.

So we partnered with licensed providers in different geos to give them access to those and and do it in a thoughtful way that's very fast and but compliant and improve make money move internationally. So yeah. That's a a lot of the themes in the report go to to some of those kind of last mile, getting money to the other area,

and then actually deploying it or getting what the customer wants, you know, in a b to b scenario, for example. That was definitely one of the biggest takeaways for me having these conversations and getting into the weeds a little bit here. And and I think this part of the report I'm on page 22 of 40 here, so we're kind of in the weeds already.

But just the differences of how f like, what FX looks like in different corridors and going from point a to point b really does change based on where you're starting and where you're going. The transfer fee that this specific chart here is, like, the margin versus transfer fee and how the total cost of that changes, but also the impact of FX changes market by market.

Brent, I'm curious from your perspective as you've gotten into the role, as you've worked with some of your customers, as you're dealing with whether whether it's HopNow specific corridors that you're owning or just general observations. Like, are you seeing right now in terms of flow,

with with specific corridors and just FX more broadly on a global scale? For sure. I I mean, if, you could hear some of these conversations. So usually customers come to us with a problem. And I think they've learned, and they say, hey, Brent. You know, you and your founders, like, here's the problem. What do I need?

And to your to your to answer your question, it's usually these emerging markets that are complicated because USD, Euro, GBP, MXN, these are very tight spreads, and it's been you know, there's great liquidity. There's a ton of partners doing that. That's solved pretty much in the, like, g 10 currencies. It's these emerging markets. I'll give you an example. A customer a customer came to us, our partner, and they're like, hey. We're we're trying to get into Central America.

Like, well, not many people are great with Central America or certain parts of Southeast Asia on that side of the world. And, you know, a company will come to us and be like, here's my problem. I need these six currencies or eight currencies, and I need, you know, local payouts or something like that. The challenge is it takes you know, we have to be very strategic with them because we have to get really in the weeds to figure out what exactly is the root of this problem. And you'd be surprised.

Some of these are 500 to a thousand person companies, and you think they have it all figured out. They've raised a ton of money, but, like, they might be entering a new geo that is new to them. They don't have local partners. They don't have things set up, and they're not gonna go get a license in some of these countries right now.

They're just in growth mode, and they're servicing their customer who's like, can you help me here move, you know, invoices or payments for my b to b application or b to c if they're all launching in a new app or something or a new geo. So I think that's what a lot of the conversations are. It's like, hey. We've got this fixed, and we're optimizing here in these g 10 currencies. We need help in these other areas. And, oh, hey. Some of our businesses we work with, they actually need USD accounts.

So we help them, you know, with a white label offering to give them access to these USD accounts, and that is like a revenue share. Now they're actually growing. They're making money. And I go back to, like, okay. Are we trying to just reduce cost? As you know, software and financial tech. You're either gonna reduce costs or you're gonna help them grow. I feel like we do both, which is kinda unique.

So we can help them with the trading and the FX and the stable point optimization, fast settlement, and then settle to those virtual bank accounts that we've helped them get. And, oh, the company that helped set that up with us is now, you you know, making money as well because they're white labeling some of these offerings. So I go back to, like, what is the what is the pain some of these companies are having?

And it's usually these emerging markets that there aren't a lot of good providers yet, and it happens to be very profitable in some of those areas.

Right. We've seen this trend, and, Dave from Etherfuse is somebody that that really sticks out. I had this conversation with him in in CDMX of just you know, they're not charging any bips on forex, you know, going in and out of their their stable bonds, their local currencies. It's not the right place to make money. It really it really think gets at this this idea of the last mile problem. And what do people do after the transfer? They get the stablecoin. Stablecoin payouts, you know, are everywhere.

They have their virtual account in USD you you know, USDC, USD. What do they do after the transfer? How do they get into local currencies? What are the local providers that they're working on? And how do we make sure that, you know, the HopNow customers are prepared to support them, support getting to those local currencies without, you know, 6% and kinda just falling into creating the the creating the same issues that they're trying to escape. Yeah. Yeah. You know what? I hear

here's here's the reality of it is that, like, some of these local currencies are very nuanced. And I'll give you an example. If you guys have been tracking I'm I think some of these conversations you've had with some of these founders that are in countries like Brazil or, you know, certain countries in The Middle East where you have to have a local license or you have to pay a a tax when you're moving money in and out. And then in certain countries, they're getting ahead of it and saying, hey. Wait a second.

You're converting our local currency to stablecoins because you're offshoring all that money, which, obviously, if I was in charge of a GDP for a country, I don't want all the money to leave my country. And you're seeing this with some Latin American and African countries right now. So, you gotta really analyze the flow on some of those use cases to be like, alright. We're moving money from Brazil to China. Okay. So money's leaving Brazil. Maybe it's importer, exporter.

It's the nuances of who the customer is is really at the core of what are we trying to solve. And you can't just, like, zoom out and be like, oh, this is gonna help all of these customers. Take note. Here's the country. Here's the corridor. Here's the pain point. And then getting money to this country has a problem because maybe it's a bank rail issue or a tax issue or a compliance or whatever it is.

So we get really strategic with our partners and customers to figure out the pain to a point where it's like, we keep having to ask. You know? Like, an a discovery call takes a while as as some of, you know, your interviews have mentioned, where it's like, we really have to get to the root because it's not so simple. This isn't a really simple thing. If it was simple, everybody they wouldn't need companies like ours.

So it's getting back to, like, the banking providers, the core of the onion ears, the brails, you know, the local currencies at the end, which is a bank, a local bank. And, yeah, each one of them has their own complexities. So I it's hard to say all of them at once as, like, fixing this. But I think we've been very specific on ones that we think we are providing a lot of value at, and we'll work with local, licensed partners in those regions to supply a broad set of offerings in our product as opposed to, like, hey.

We do this one country, and that's all we're in. And I think you've seen this too. Like, the local payouts thing is it's real. I mean, look what happened. Circle bought Tazepay or is buying Tazepay right now, which is a local payouts provider, Southeast Asia, India, etcetera, and they do that really well, where Circle sees the value of it in the whole flow. It's like stable coins are one thing, but now, like, why are those used?

Because eventually, the person is either getting they want stable coins or they want local currency. So I think the the hybrid model is real. Some some end payouts are in stablecoins, and then some end payouts are they want the dollars, right, at the end or the local currency.

So walk us through here. This this I know you guys are, every time I look at the website, it gets better. The the quote to cleared in minutes. I like this part. Quote execute, settle by API dashboard or chat. So it seems like this is kind of the visual the visual experience of where HopNow fits, but also where stablecoins specifically get chosen or not chosen as a rail for settlement.

Walk us through this visual a little bit in terms of what we're seeing both from, like, where where HopNow is is specifically getting leveraged and where, Brent, from your experience right now, I think we're really entering a moment where stablecoins are just becoming first class citizens in the menu, and they're not just standing alone over here. I'm curious where you see stablecoins currently really having preference versus maybe, like, we're seeing here, RTP or Swift in these more, like, traditional routes?

Yeah. I I'd say there's I'll I'll first answer the first part, which is the flow. So we have a client. They're onboarded to us. They've gone through our KYB. We're a partner of theirs. We have a very fast KYB process, thorough compliance, everything, but we're doing first party training. So they get access to a quoting tool. They can do that via API. They can do that via our dashboard, which is a beautiful kind of experience, very simple, or they can do twenty four seven, three sixty five chat trading.

Now some companies want one or the other, and that's fine. Usually, they'll you know, if it's a smaller business, they'll just say, hey. Let's just use a dashboard, more enterprise. They're gonna go with the API. And then some companies wanna do chat just because we're talking money. We're talking millions and millions of dollars of money on every trade, and there's a human element to it. So sometimes they just wanna check and make sure and all these things. So we have our dashboard. They get a quote.

They say, okay. I wanna execute that quote. They have the choice, and then they, you know, say yes and secure the quote. They presettle in either fiat or stablecoin. And then within, you know, usually thirty minutes or so, they have the other piece of that transaction, whether it's via SWIFT or via stablecoin, whatever it may be. And then they have that delightful settlement experience. They'll do that multiple times a day, our clients. Some will do it more than others.

But I feel like, you know, when you're talking about, like, the why, why are they doing that? Why don't they just go from FX to FX? Some of these markets have highly volatile and complex kind of rails where it's like, you know, with Latin America country or Central American country to The US.

Sometimes you're like, let's just put it in a stablecoin for now, and then let's figure out, you know, when we need to dump it to a local currency because we don't wanna be exposed from a risk and holding another and having to, like they're not into hedging these currencies, really. They're just they're doing it for operations, but then they have to make sure each country that they're working in has the right amount of capital.

So sometimes they'll park it in the Sablecoin process and and and hold it there for a little bit and then move it out to where they need it to go geographically. I'll give you an example like a, you know, like a financial technology company that's in a 100 countries. How complex is that to manage all these currencies where they have to have a balance at every one of these bank accounts to do local payouts or whatever it may be?

So they might kinda park things in stablecoin temporarily and because it's so much easier kinda in that region to then convert that over as opposed to having to move from one US bank to another correspondent bank to another thing and having all the issues and risk of losing time in that. So everybody talks about time and speed and cost and, like, those are real. But I think it's also just it improves the operational efficiency of the treasury team when they're using stablecoins.

Not every company is doing it yet, obviously, but the ones that are are, you know, medium sized, fintechs growing, some are unicorns,

and their treasury teams are locked in, and they've got, you know So so would you say is it fair to say that some teams because we hear this idea of, like, oh, Stablecoins are limit limiting prefunding. Is it no. Actually, they're just prefunding in Stablecoins in certain geos because once they're there, they can just move faster. Is that a would that be a a correct way to think about that? Is that off? Because Yeah. I think I'm yeah. Help me understand that a little bit.

Because in in some way, it sounds like prefunding,

but maybe it's just a a different form factor. Yeah. There's a debate I saw today online on LinkedIn or something with a couple of big companies talking about the prefunding because, you know, I've I've seen a bunch of a bunch of our partners do, credit, and they sell credit in lines of credit. And we we offer credit to some of our customers as well. They love that product.

So they say, oh, this would be super helpful if you could offer us a day, you know, so I don't have to prefund and have to wait to get all the approvals and do all that. Like, hey. I'm good for it. Usually, we'll have a strategic relationship with them as we offer that. That's a very valuable tool, but I wouldn't say it's necessary all the time. And what I mean by that is, you know, to fund a stablecoin takes a matter of seconds. Right? Or now Fiat, you're right.

Like, some of these businesses are the balance sheets are are what I call delicate. And it's like if you're a remittance company or a fintech where you're moving so much money every day, you know, unless you've raised hundreds and hundreds of millions, you don't have it just sitting there on the sidelines where you can park it at a bunch of places and keep it there for long. So money is moving very quickly in and out of their bank, in and out of the payment company, and then getting to be where they need it to be.

So I think you'll see that in the credit company, they're usually, the companies I've seen out there are highly expensive. And some of these companies are running on low margins, and they're growing, and they're focusing on growth that they're, you know, looking for five days or ten days of credit to just make it a little where they can take on a little more growth. Sometimes that credit line is very expensive to them. So there's some challenges with that.

But we like to offer it and and kinda bake that into the relationship if the customer is looking for it. This was another part of the report. I think that specifically speaks to this

a little bit in terms of raising like, linking financing to prefunding accounts and the delicateness, Brent, as you mentioned, of, like, how some companies are actually raising capital or or able to use larger fundraising rounds to avoid that delicateness or fragility. I don't know if you wanted wanted to expand on this at all. I've seen that. But there does seem to be a unique Yeah. Yeah.

Unique advantage, especially within this, like, cross border payment conversation where you can actually, by raising a lot of money, avoid and and kind of get zero to one way faster and have a sense of strength and foundation if you do raise

from VCs a lot of money. I'm wondering if you have any thoughts there. I I do have a I I have a thought on it, and I've got I mean, the first thing I would say is that we haven't raised nearly as much as our competitors, which goes to show you don't need to, number one. Number two, you know, when when the the companies that have raised, you get into the hey. Let's do the easiest thing by just using our capital instead of actually building the operational efficiency behind the scenes.

So maybe I would say you tend to to go on that side because you have the capital, and it's easier to do that instead of building the right infrastructure that allows you to do way more in terms of processing on the trading side without having to have the that that, you know, deep ammunition or whatever you wanna call it. Right? The powder. So I I I have seen that in the space. I don't think it's necessary, and then we've proven that it's not necessary. We're as tight as, you know, the tier one desks on pricing.

We're as tight on the speed. We could take on any client size, and we compete with companies that have raised, you know, five or 10 times what we have. I think we've chosen to build a profitable engine in in doing in a way that our team has experience. We've been doing this for a while. So that's my thought on it. And I think you you do see some of these companies that raise a ton and use that as an advantage. But I think it might bite in the back because you're not it's gonna dry up at some point.

Yeah. So would love to, you know, specifically unpack that a little bit more. Like, what what are if if that is true, like, fundraising and going down that path, like, an extreme level wasn't initially the the focus, and you've been able to create defensibility, create products that work, create competitiveness in the market against some of those companies who may have done that. Yeah. What what sort of what advice would you give?

I mean, I feel like there are a lot of earlier founders and teams who might be in the position where they're they're asking that question of, like, do we need to go raise this massive round? But I don't think enough people actually make the case for why that actually doesn't make a lot of sense. Would love to would love to hear more on, like, what what is getting like, what would those downsides look like, or how do you avoid or how do you increase success and avoid having to raise?

You you gotta you gotta keep your team super hungry as well. Have you ever heard that, right, where it's like you can't you can't rest on your laurels. You can't rest on a big round and think it's all gonna happen. You need great founder led sales. You need to hire salespeople. You need to go invest in things like operational efficiency, compliance, the right tooling, the right infrastructure.

That's where you use the capital as opposed to using it as a weapon to take out competitors or, you know, go in with different types of things that are not defensible. You want to build the long term products that can be self sufficient and grow over time.

You wanna use the capital to fuel the growth of the company in terms of headcount, go to market, salespeople, marketing, all of those fundamental things that have not changed in business for forever as opposed to using the VC funding just, you know, on the back end, like, trading or things like that. So we're investing on the infrastructure. We're investing on licensing. We're investing on the things that are gonna make us a more valuable company in in the future.

But, again, like, our team has the experience building out these things for years, so I think we have an advantage there. But we'll see we'll see kinda as things play out. I I do think you'll see a lot of companies in the space that are are head to head with us and have raised 10 acts of what we have. So that should be a testament to, like, we can compete there. So

That's awesome. As we close, any other, like, key closing the year type of things that we as at in the market should expect from HopNow, themes that you might be seeing brought more broadly with you know, there's a lot going on right now with, like, you know, the buzz around Clarity, the buzz around, you know, Arc main net. We're about to talk with Circle and Arc here right after this. Like, any other, like, just macro comments around the space and what you're seeing?

Yeah. I I keep seeing I mean, the the appetite for new companies. I mean, I'm seeing new companies pop up every day, which is great. I think Yep. You and I have experienced crypto winters. We've been OGs in this for a long time. It's like, we we kinda feel like we might be here long fall. But, like, I I I'm seeing the I'm seeing stable point growth month over month over month. So that's real. I'm seeing more companies.

You know, we're we're talking to companies that have not done anything yet and are educating them on going this path, sitting down with treasurers and, you know, large companies to figure out the path. They're investing. I think financial services historically have been, you know, the slower types of companies. But I here's one thing that you will see probably. You know, I know it's event season and everybody's flying around and meeting with people. I think more companies that have licenses will go up in value.

I think there's gonna be more acquisitions. I think there are there's quality over quantity. And what I mean by that is, like, the the people. It's like, are you working with the right companies? Are they gonna be there long term? Are they going to be the ones you wanna work with? But just getting strategic with these businesses is what is kind of a theme that we're going on. And and and I think not selling a point solution and looking at a company is like, are you selling a point solution? Are you selling it?

Are you gonna help me with solving my problem? Are you selling me a solution? And is your road map aligned to what we wanna offer our customers? Because a lot of these startups that we sell to are medium sized businesses. They're trying to figure out they don't care about the cost savings. They care about growth. So how are we gonna help them grow? In interviewing companies, they're like, hey. You're gonna talk to Circle. You're gonna talk to ARC. Are they helping companies grow?

What are the products that show me if I implement Arc, I am going to produce more revenue as a business? That's what's gonna be interesting for the next six to twelve months in this space. And those are the companies that that I would kinda focus on. And some of them are in the report and gave great content, and I think, we're one of them. So thanks for having us today. It was it's been great. Amazing.

Lovely working with you.

Brent, thanks for the time. This is fun. Yeah. Thank you. Good to see you guys. Thanks for coming on, Brent. Alright. Cheers. Bye.