From his Auckland base, Jerome Faury is putting in place deals that will increasingly allow millions of cryptocurrency owners to seamlessly make payments via the Mastercard network using the assets stored in their digital wallets.
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Faury’s company Immersve has developed blockchain technology offering the flexibility and autonomy of the Web3 world, while integrating into point-of-sale systems used by 70 million Mastercard merchants around the world.
Web3NZ caught up with Faury to find out more about his Web3 journey with Immersve, his plans for the company which employs around 25 people, and his thoughts on the state of play in payments and fintech in Aotearoa.
What was your entry point into cryptocurrencies and blockchain technology? I know it features a Bitcoin-enabled Coke machine.
I got into payments in the 90s. Back then, it wasn't quite as sexy an industry as it is today. Selling Eftpos terminals was like selling a used car. But I always found the technology interesting.
My dad was a programmer. I was cutting code at seven years of age and saw potential in payments early on. Where I saw the potential was in that last mile plumbing, connecting payment systems with point-of-sale systems, e-commerce shopping carts, vending machines, and parking machines.
In 2004 I helped to get credit cards enabled on the parking machines down in Wellington with text-to-park. I did a bunch of stuff with Apple, with mobile. And now with crypto, I think there are three key parts to the future of payments.
What are those three parts?
One is digital identity, for individuals, entities, and also devices. My car will have its own digital identity. It will transact with a parking machine that has a digital identity. Under delegated authority, I'll just park the car and walk away.
Each of us will have our own identities with our credentials stored locally that we share with the bank or any other party that needs to access information, on our terms.
Two is digital currency. I don't think we're going to be printing money in the future. I think money that's created by computers for computers is the way of the future.
Three is digital payments. What a lot of people don't realise is that 99% of all payments today use technology fundamentally developed in the early 70s. It's a card number, an expiry date, a transaction ID and an amount.
But in the not-too-distant future, it's going to be the point of sale and there's going to be apps, APIs, data, personalised payment experiences, relevant rewards, and a whole bunch of stuff. We're going to shift from these kinds of electronic payments, which are like a Nokia phone, to digital payments, which will be more like an Apple app-based experience.
It's probably no surprise that payments are now larger than banking. And there's just so much investment and opportunity in this space. New Zealanders are definitely in a prime position to make the most of it.
Back around 2020, you were running Centrapay, tell us about that business.
I saw the need in New Zealand for a new digital payments infrastructure, one that enabled any app to transact anything on any device and that included digital currencies, and loyalty points. Why can't I use my Air New Zealand app to scan a QR code on a payment terminal to spend my air points wherever I want? Why can't I use my BNZ, ASB or Westpac apps connected to open banking to spend? Why are the banks referring their customers to their largest competitor Apple to do transactions and then paying the Apple tax?
I saw the point of sale becoming the epicentre of payments. A lot of people don't realise this, but 40% of Stripe’s revenue comes from Shopify. And so e-commerce isn't shopping carts anymore, it's payment platforms. The point of sale is going to be the same thing. So I set up Centrapay. Basically, every payment terminal in New Zealand can now connect to Centrapay. It's the largest kind of acceptance network, technically, because it works with the WindCave network, the Verifone Eftpos network and the Worldline network.
And that enables anyone to build these personalised payment experiences on top of it. So we did that in 2019 and we're pretty proud of the success that that business has had as well.
What are some of the applications customers are using over that network?
Farmlands uses it, and so does epay New Zealand for gift cards. Why can't I send a gift card to my sister on her birthday because I've left it a little bit too late, instantly in a peer-to-peer way? So we did stuff with epay on that.
There's this new trend in the Web3 space called tokenised real-world assets. So you're going to see tokenised property, tokenised securities, a whole bunch of digital twins for financial products and other assets, identities and currencies and all that type of stuff.
In 2019 we created digital versions of Coke because Coke, whilst it's got a massive consumer presence, doesn't have a direct relationship with consumers. They distribute their physical products via distribution channels and bottlers around the world. If they create a digital version of their product that they can send to Peter, Peter can then go to the movie cinema and redeem that for actual Coke.
Coke goes from being a supplier to the movie cinema, competing with PepsiCo, to being a sales channel. They then have a direct relationship with Peter and they can use their digital products as currency to engage with consumers. Coke is now doing tokenised loyalty on the blockchain with Centrapay. They ended up investing in Centrapay as a business. It's really interesting how you can kind of innovate and create these new consumer experiences in a way that previously wasn't possible.
Centrapay enabled a lot of flexibility and convenience in payments. But then you had your eye on something even bigger. Tell us about the genesis of Immersve.
With Centrapay, the challenge I had to deal with was two sides of the marketplace. It was getting businesses on board who would ask, how many consumers have you got? The consumers would be like, well, where can I spend this thing?
It took a long time to build and it was also very New Zealand-centric. I wanted to bring the best of Web2 and Web3 together. And so on the Web2 side, I partnered with MasterCard. They have 70 million places where you can accept the card without having to onboard each of those merchants individually.
They also have an existing commercial model built into the network called interchange fees where we can generate our revenue from and just plug into that. The other thing that's really cool for consumers is that if I go to nyke.com instead of nike.com and I don't receive the goods or services that I reasonably expected, I have this kind of insurance called a chargeback. So I was like, that's great. If I can do a partnership with these guys, then that brings a whole bunch of value to our consumer partners.
On the Web3 side, I saw some bad actors in the crypto space. I wanted to enable consumers to have the same kind of benefit that they have with cash in their wallet, but be able to spend it without having to trust an exchange, without having to trust a bank, or even involve a bank and actually without even trusting my company.
It was quite challenging to be fair, but we wanted to bring the best of Web3, the values of self-sovereignty: my identity, my data, my assets, empowering individuals, and then connecting them to the Mastercard network.
The timing must be perfect with crypto having a bull run. A lot of people will have more value in the cryptocurrencies stored in their digital wallets.
At the moment, there are roughly 100 million people around the world with a Web3 wallet. It's growing at a compound annualised rate of around 30%. We believe that by 2030, roughly a billion people are going to have a Web3 wallet.
We are aiming to get 5% of those people to have an Immersve card, which would be roughly
50 million cards on issue by 2030.
How does it work? You basically convert the crypto you have in your wallet to the USDC stablecoin and that's the basis of the transactions that you enable?
These different blockchains, like Bitcoin, Ethereum, Algorand, and Ripple, think of them as an operating system for digital assets and for digital currencies. We have technology, often called a smart contract or a protocol, that runs on these different operating systems.
We've got a multi-chain protocol that enables the assets on those networks to transact with Mastercard. We then have a particular set of APIs that enable apps to transact. They could be web extensions, they could be web apps, or they could be mobile apps to create a card, set a pin on the card, and sign a transaction. So instead of the bank or Immersve approving a transaction, you approve the transaction.
It's quite a different kind of approach. We've built this technology in a platform way that enables any party, particularly Web3 wallets and those that operate in the crypto space, to issue, create and embed a Mastercard into their experience so that users can have their assets under their control and an easy way to spend them simply by tapping their phone anywhere MasterCard is accepted.
What do merchants have to do to accept payments this way?
We're kind of bridging this unregulated world with a highly regulated kind of world, this 1970s technology with this 2024 technology. From the merchant's point of view, it looks just like a normal MasterCard payment. From the point of view of a Web3 user, who cares about the values of Web3 - decentralisation and self-sovereignty, it looks like a Web3 payment.
The Commerce Commission recently told the banks that they need to do more in payment innovation. What needs to happen to unlock that innovation and that potential that we're seeing in other countries?
At the moment, the governance for the banks is very much the turkeys voting for Christmas, you know, its self-governing. It does feel like there's a lack of ownership from the government. You look at open banking, it's five, or six years on, and you can't even do a refund online by open banking. You know, no one's using it. The insurance required just to access the open banking API is probably north of $100,000 a year.
The integrations with each of the banks are probably $50,000 a piece, technically, plus the same in lawyers' fees to do the paperwork. And you've got less functionality than what you do with the old direct debit, direct credit system. Where's the carrot, where's the stick? There's neither of them.
The banks are not investing anywhere near enough in innovation and payments innovation, whether that's directly within their own business units or partnering with the local fintech community.
I think we put too much red tape in for the banks, you know, and they're scared to do anything. They can't make decisions. They can't be decisive. Even developing nations have better payment infrastructure. We've gone from being the All Blacks of payments to not even being the All Whites in a very short period.
The government inquiry into cryptocurrencies came back with some quite pragmatic, quite conservative recommendations. But the Government said in response that it is mainly going to keep a watching brief on developments. Was that disappointing to you?
There's a real lack of leadership, both in government and I think in the large fintech banking community. I think there's lots of short-sightedness, a lot of let's kick it down the road, it's not going to happen.
I can tell you what’s going to happen. Big Tech is going to invest heavily and innovate in payments. You're going to see Apple, Google, Facebook, and Samsung providing consumer payment experiences. You're going to see it on the merchant business side too.
If I can send some sort of value instantly to someone that they can accept and they can use anywhere that they want, they're not going to care whether it's New Zealand dollars or something else.
If you look at history and the importance of currency and what it means to society, if we lose the New Zealand dollar, people start transacting in the AU dollar or the Facebook dollar or the Apple dollar, that's not going to be good for this country. But by the time the powers that be figure this stuff out, it's going to be well and truly too late.
You did a successful seed fundraising round last year. Where are you now in terms of funding?
We were lucky that we raised enough capital to do what we wanted to do, both in delivering the platform and onboarding customers. Last week was probably one of the best weeks we’ve had. We signed contracts with two clients that collectively have over six million users, which for us is a big thing because we want those users to get a Mastercard and be able to transact.
We've been approved by the Australian Securities Commission to operate a digital currency payment service in Australia. And we've also started the process with the Central Bank of Ireland, and the Financial Conduct Authority in the UK. We've got a US entity set up and long story short, we're trying really hard to scale globally as quickly and efficiently as we can.
We've got some key customers that we're going live with and we're getting the regulatory approvals that we need to operate in key markets. And at the moment we don't need any additional capital, but what we are doing is reasonably expensive, so it's something we'll be looking at in the near future.
This interview was abridged for brevity and clarity. Article written by Peter Griffin.