Payback time: money transfer app Circle eyes a global future... even with Trump
With €128m in private funding, Circle wants to become the company you casually use to pay back a friend, free of charge. Our technology editor spoke to co-founder Sean Neville about how the firm, which has offices in Dublin, London and Boston, plans to become the Gmail of payments
Sean Neville is sitting in a Dublin hotel, slightly bleary-eyed after taking an overnight plane from the US. The Boston-based co-founder and president of blockchain payments company Circle is considering the geopolitical scenario the world has landed itself in.
"I hope Trump lets me back in a few days," he says.
His startup, which has so far attracted €128m in funding from backers such as Goldman Sachs and IDG, regards Dublin as its global headquarters - but both Neville and co-founder Jeremy Allaire are American and spend most of their time at the firm's Boston office.
So he needs to make his flight back.
"Oh well, if they don't let me back in I'll just stay in Dublin," he says.
Up to now, Circle has mostly been known as a bitcoin company. It has used the technology behind the cryptocurrency to build systems for transferring established currencies more cheaply than existing transfer systems are capable of.
Now it is shifting firmly into a consumer offering of its own. It wants to become the Gmail of casual payments, letting people use their own currencies and bank accounts. Its main product allows people to transfer money to one another free of charge, once it's in the same currency. This works with Visa and Mastercard debit cards, with some credit cards likely to be added soon. For exchanges between currencies (dollars, sterling and euro), a small charge is taken.
"Right now it's popular in the US with people who split their rent or pay each other back small amounts," says Neville, who has Irish roots. "Recently we launched in Ireland and Europe. I think we're almost at a tipping point where transferring money simply by being connected becomes normal."
Neville says that the company will soon disclose how many people are using Circle. The most recent figure he is willing to share is that the service has passed the $1bn level in transactions completed and is growing at a run rate of 300pc per annum.
But it is the way that Circle is offering financial transfers that marks the company out. It wants to bypass much of the middleman technology and bureaucracy associated with transfers in favour of new secure standards that are much more accessible.
He likens the evolution of digital money transfers to accessing content online through Google or social media.
"The notion that people are connected globally through a value exchange in the same way that they're connected through Twitter or text-messaging already is something that I think is close to becoming mainstream," he says. "We may still be a little early, but ultimately this is going to happen."
This is a big vision that undercuts the way we think about securing money transfers. It is rooted in 'blockchain' technology, the idea that there is a secure basic platform upon which services can be built.
"We're very close to a public version of a protocol for value exchange," says Neville. "And that will be the thing that other developers, financial developers, banks, software companies or even people in university dorms will all plug into this to create value. This would happen in the same way that a blogpost I write is accessible anywhere in the world because of the basic http platform it's based on. Of course there are some regimes that might try to block access. But, generally speaking, the protocols are available to distribute that information."
Some heavy hitters in the tech and financial industries agree. Circle has been heavily backed by canny investors ranging from Goldman Sachs to General Catalyst. Barclays is the company's banking partner in Europe.
For the moment, these companies are content to let Circle build out its product without much significant revenue. Circle doesn't charge much of anything at present.
"If you're just transferring euro to euro, we don't make money," says Neville. "It's a free service. Our revenue streams right now are tied to foreign exchange. There's a slight mark-up, but it's the lowest mark-up you can get anywhere and it's just to cover our costs. Ultimately, we believe that all that stuff goes to zero anyway. We don't have a long-term plan to optimise that revenue stream for profit, even though right now it's a revenue stream for us."
So how does the company plan to make money?
"We have future products we imagine being built on top of that transaction base. If you think about the things that banks do, such as holding money and receiving money, ultimately we believe that the cost of that goes to zero for consumers," he says. "Just as there's no cost to send you an email. Google can't charge you fees for that, they make money in other ways."
Neville won't be drawn more on its future revenue models. But he does say that credit cards are a future part of Circle's digital transfer plans.
"Credit cards are cheaper in Europe than in the US," he says. "We like to beat all the fees so that our customers have no fees. Ultimately we want to connect to every kind of funding sources that people need to use. When we founded the company, we didn't set out to replace the existing economy, we think of it as a hybrid. We need to connect the existing system, to the salaries and bills in currencies people understand. So we need to connect to all of those things. And if customers like to use a particular type of funding source, then that's a funding source that we want to integrate."
Even while joking about not being let back into the US because of fraught US travel restrictions, Neville thinks that recent western geopolitical shifts in favour of nationalism have only had a limited effect on the emergence of global transfer systems.
"We haven't seen much interference yet," he says. "People who are very comfortable with our vision for a spending account or using the app for payments just sort of assume this is a thing that will work on my phone, wherever they go around the world. They believe that it's an implicitly borderless, open world.
"So that contingent of customers is a bit different than the wave of populists who elected the current administration in the United States. In any case, we just don't believe that value exchange needs to have borders. It is valuable to connect someone in China to a merchant in Ireland to a family member in Africa and so on. That should be free and instant and secure. It's a very globalist view."
Brexit, he says, came as a "shock". But the main challenges to the company arise from passporting rights associated with UK transactions and firms. However, Circle remains "very committed" to the UK as a market and as a country in which it maintains an office. This is partly because of the unusually proactive behaviour of the UK's financial regulator, the FCA.
"Even though the past year with Brexit has been an adventure, we have a great relationship with the FCA in the UK," says Neville. "They have been very aggressive about attracting financial software companies to the UK.
"We were in a situation where we founded the company here but we have a research and development office in Boston and a small office in San Francisco. But the UK reached out to us very strongly and thus we have a London office. They're extremely helpful and it's interesting to look at how other European agencies, including Ireland, are now responding.
"After Brexit, some European countries, including Ireland, have started to step forward where they may have been a little bit more conservative in the past. They have seen the success that the UK has had and this is an opportunity for them to do the same. The work the UK did has helped inform other European regulatory regimes and central banks about the opportunities, They have a clear model now."
The company runs its Emea operation from its London office, headed up by Marieke Flament. However, Neville rates Circle's Dublin office very highly.
"Dublin has proven to be a great place to hire," he says. "We've a very talented team here. I now think of Dublin and London as sister offices."
Part of Circle's branding challenge is to convince punters that it runs a normal money transfer service instead of some deep-tech bitcoin startup that requires knowledge of cryptocurrencies.
"It's fair to say that there is some toxicity in the mainstream around the bitcoin brand," says Neville. "I think that if you were to ask people who weren't that familiar with bitcoin, they might associate it with something that's not too positive such as ransomware, the dark web or other activities that regulatory regimes would obviously frown on.
"When we set out to create the company, we thought of bitcoin as something that would be in the background. In the same way that we don't use Mosaic [an early internet technology that paved the way for modern systems] to browse the web, we actually do use pieces of it when we use Chrome or Safari. That's how we thought of bitcoin. But we didn't have the regulatory approval we needed to move euros and sterling and so forth.
"We had to decide whether or not we stayed in stealth mode until we acquired all of those licences or whether we launched with bitcoin a little bit more front and centre than originally intended. We chose this path so that we could test our operation readiness and learn more about the product and so on. As we acquired the necessary licences, we pulled bitcoin further and further into the background like we had always intended."
Neville says that Circle is still focused on establishing a product ecosystem before thinking of what happens to the company's ownership next. It is far too early to think of things such as IPOs, he says.
"No, an IPO is definitely not on our radar right now," he says.
"For Jeremy and I, this is our third company. We've had some acquired and we've IPO'd before. But when we started this company we did it with the expectation that this is a long-term play. So we're not focused on anything else other than creating the right product for customers and doing that globally with these open protocols for value exchange is going to take some time."
Circle is an online payments company co-founded by Sean Neville and Jeremy Allaire
that aims to bypass middlemen, bureaucracy and costs associated with currency transfer.
It has offices in Dublin, London, Boston and San Francisco.