Bahtfintech Co, a new blockchain-based e-money startup, plans to raise 900 million baht in funds through an initial coin offering (ICO) to cash in on opportunities in social commerce.
"We foresee huge opportunities in social commerce or consumer-to-consumer (C2C) in Thailand, which has challenges with fraud that can be addressed by blockchain-based e-money," said Sakda Katekaew, chief executive of Bahtfintech Co.
Thailand's e-commerce market is estimated to be worth 2.8 trillion baht, of which the C2C portion is projected at 1.4 trillion baht. Bahtfintech estimates that fraud happens with 33% of C2C transactions, a sum of 456 billion baht.
Mr Sakda said the fraud typically happens with money transfers, buyers not receiving their products, or the products being different from what was displayed online.
"The value of each C2C transaction is small, so many fraud cases are ignored," he said.
The company's service functions as an escrow account, wherein buyers have to consent to transfer money to sellers when they receive the correct products. If there's an error, the system will not transfer the money.
In contrast, if merchants can show that they sent the correct products and the buyer is denying payment, the system will automatically transfer money to sellers. The system was designed to protect both sellers and buyers.
Buyers have to apply for the service and merchants need to accept the Bahtfintech payment system.
The platform uses blockchain-based technology to make secure and transparent transactions, as well as to support 11 digital coins such as bitcoin and ethereum that will be added to Bahtfintech automatically, as it is also an exchange.
Users can add money to a Bahtfintech account. If users transfer to others without using the escrow service, the service is free of charge. If they use escrow, they will be charged 0.1% of the total transaction each time. The rate is low compared with the 4% charged by credit cards.
"We are a bridge connecting physical money baht exchange with digital money -- cryptocurrency," Mr Sakda said.
The company hopes to operate by this year. It needs to raise 900 million baht in funds for its registered capital to reach 200 million baht in compliance with Bank of Thailand licensing rules.
"We will raise funds through an ICO to 300 coins for the pre-sales period with a 5% discount through www.cash2coins.com by the end of March and open for the public at the end of April," Mr Sakda said. "One coin is valued at three baht."
The company expects that after one year of operations, at least 5% of C2C transactions will adopt the service in order to reduce fraud.
Mr Sakda said the policies of the Securities and Exchange Commission towards cryptocurrency regulation will make the digital coin business more transparent and trustworthy, and ICOs fraud-free.
Chukkrit Watcharasaksilp, chief of sales and marketing of Advice IT Infinite Co, said his firm is the first partner of Bahtfintech to accept this kind of payment for online advice.