While Thailand’s startup scene may be small, one of its up-and-coming fintech startups is brimming with world-scale ambitions, aiming to leverage its mega-conglomerate connections to become Asia’s primary cross-border payment network.
Lightnet, founded in 2018 and chaired by Charoen Pokphand (CP) heir Chatchaval Jiaravanon, seeks to break the barrier between cross-border and domestic payments by making transactions across currencies so cheap and fast, money senders will barely see the difference.
By using the cryptocurrency Stellar as an intermediary for cross-currency financial transactions, the company aims to make traditional international money transfer options like SWIFT and Western Union obsolete.
Tridbodi Arunanondchai, Lightnet’s group chief executive, said the firm aims to be the primary cross-border payment intermediary for Asian banks, tapping into the large population of overseas workers across Asia-Pacific that regularly make remittance payments. In Southeast Asia the volume of remittance payments is valued at US$150 billion per year.
“What is the difference between remittances and payments?” he said. “It's just adding the word cross-border. Our goal is to make payments universal and borderless.”
PROJECTIONS TO THE MOON
In January, Lightnet raised $31.2 million in Series A funding from large Asian financial institutions including UOB Ventures and Seven Bank. It has 10 bank partners, with Siam Commercial Bank its largest Thai partner.
Mr Tridbodi, a former investment banker, said Lightnet will soon have its first transaction from a 7-Eleven store, likely a money transfer between Japan and Taiwan.
The company is waiting for the Bank of Thailand to issue a licence to 7-Eleven Thailand, owned by a CP Group subsidiary, to allow customers to make remittance payments at the convenience stores.
"Using transport as an analogy, traditional banks are like car companies, domestic payment services like PromptPay are like railroads, but we are an airline that can facilitate access to the entire world,” he said.
Mr Tridbodi estimated Lightnet’s network will handle $1 billion in transactions this year, a number he hopes to increase by 5-10 times next year. Eventually he sees Lightnet growing to the size of Visa with its network the primary cross-border transfer intermediary for banks across Asia. Thailand and Indonesia are its largest markets in terms of transaction volume.
The startup spent its first two years developing its network and only began facilitating transactions this year. It currently employs 150 people with 60 in Thailand and the remainder based in China and the US.
“From now until the second quarter next year we want to make sure we have a large amount of transactions and scale up our Asia-Pacific coverage, and after the second quarter we can talk about looking into partnerships and joint ventures in other regions,” Mr Tridbodi said.
FINTECH REVOLUTION
Lightnet is completely business-to-business, with money transfer customers unlikely to be aware of its participation in the transaction. The bank handling the remittance can choose between Lightnet and other cross-border transfer options.
He said Lightnet’s network cuts the cost of cross-border payments by reducing the number of intermediary parties from about five with traditional services to two (the sender and receiver), while costs can be further reduced as the network scales up.
Mr Tridbodi said Lightnet chose Stellar as the cryptocurrency settlement system for transactions because it is relatively small and the team behind Stellar can devote time and attention to a partnership. Eventually the company wants to add more cryptocurrencies to its network in order to scale faster.
While he has unwavering confidence in his company's technology to dominate the cross-border payment market, Lightnet is not alone in this space.
In Thailand, Lightnet faces competition from DeeMoney, a fintech startup operated by telecom provider SawasdeeShop and partnered with SuperRich International Exchange, which is developing its own network with blockchain payments company Ripple.
“There are very few startups in this space making actual transactions with financial institutions,” said Mr Tridbodi.
“We are making transactions with SCB, and 7-Eleven. We are also probably the first blockchain startup in the world backed by eight leading conglomerates, while the rest are backed by venture capital firms.”
He said the company will seek Series B funding next year to expand its network and make merger and acquisition deals, likely waiting 5-10 years before launching an initial public offering (IPO).
“I think Lightnet will have an IPO when fintech is accepted as an equal to a bank,” said Mr Tridbodi.
“When Ant Group tried to do its IPO, regulators did not accept it as a bank. We have to wait until fintech revolutionises the sector.”