A bootstrapped startup in the Isle of Man has launched a payment processor called ChainPay that it hopes will compete with the likes of BitPay and Coinbase in the European market.
The firm, called AltXE, says it is focused on signing up European merchants to use its payment processor and that its fee schedule and personal attention to customers will distinguish it from its much better funded competitors.
“If you sign up with Coinbase you might be just another merchant in their box. If you sign up with us, we’ll be engaged with the merchant, making sure that everything is functioning well,” said AltXE co-founder James Carter.
Customer benefits
Carter also pointed to his firm’s fee schedule as another possible benefit to customers. ChainPay takes 1% of every transaction and offers bitcoin exchange rates from Kraken or Bitstamp, depending on which provides the better rate any given time.
ChainPay also imposes a lower withdrawal limit on merchants for GBP than BitPay, for example. Merchants can withdraw as little as £500 from ChainPay, but must withdraw at least double that amount at BitPay.
However, BitPay’s limit for euro withdrawals is just €20 euros, while ChainPay’s is €400.
Carter acknowledged that his firm couldn’t beat incumbents on many measures because it lacks their high levels of VC investment and processes fewer transactions. Coinbase has raised $106m to date, making it the world’s best funded bitcoin startup. BitPay has raised $32m in venture capital so far.
Carter said his firm has signed up a handful of merchants since launching at the end of January and that some of those merchants are pleased with the results so far.
Exceeding expectations
One of ChainPay’s first merchant customers was SWR Auto Design, a Manchester-based designer and manufacturer of after-market automobile body kits.
SWR has already completed two sales in bitcoin, for full body-kits for a Ford Focus and a Ford Fiesta. The kits cost upwards of £700 each.
The firm’s director, Stewart Wilson, said : “It’s more than we expected, which is good.”
Wilson said he signed up with ChainPay because he has followed bitcoin’s development over the last three years and wanted to reduce his dependancy on banks and card issuers.
“We want to get away from the banks. They run our lives. The main thing is encouraging a fairer form of money in the future,” he said.
For ChainPay’s Carter, the processor’s launch is a long-awaited milestone. He and co-founder Chris Wood were on the verge of launching the business when its payment services provider, Capital Treasury Services, announced that it was cutting ties with its bitcoin clients due to pressure from the banks it worked with.
Original launch delayed
Plans for ChainPay were thrown into confusion after the CTS announcement. Carter and Wood had planned to announce the launch at the Crypto Valley Summit, an inaugural confab for cryptocurrency businesses on the Isle of Man. Instead, they were left wondering if they would be able to launch the business at all.
“The plan was to tell people about it today. We were going to come here and tell everyone we were ready to go. But CTS has pulled out and it has been really disappointing,” Carter said at the time.
Now ChainPay has its banking relationships set up, although Carter would not name the bank involved. He said the Isle of Man connection has been crucial to obtaining banking facilities for his startup.
Carter, who used to work on enterprise software at Barclays and Credit Suisse, says he envisions adding the ability to broker bitcoins through ChainPay, just as Coinbase does. For now, though, he must make his personal funds stretch far enough for future plans to materialise.
“I’m funding ChainPay myself, so we’ve got a reasonable amount of runway. We can do the next 12 months,” he said.
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