Im Starting a FinTech Company and here is the Idea
Yes, after thinking about this for a few months Ive decided to start a FinTech company. Its not a fully FinTech company but will use a lot of technology to keep the cost of operations low and gain market share. So here is the idea.
Im involved in a retail business and use two swiping machines from two different banks. Both of those machines have a monthly rent of around 600 INR. They also take 1.5% of the transaction as their fees. So if I do a business of 10 Lakhs then I end up paying 15000 INR to the bank. Seriously I dont see any reason to pay that money to the bank.
Why are businesses forced to pay transaction fees ?
Banks have issued cards, both credit and debit to pretty much everyone and people use it because its convenient, especially for high value transactions, lets say something above 1000 INR especially. Since customer is the king and their convenience matters businesses has to accept cards. The terms and conditions for getting these machines are very biased against the business. The transaction fee cannot be collected from the customer. For someone who sells products with a fixed price it means a loss of revenue of 1.5%. The money wont immediately come to your account, instead there is some settling process and daily collection arrives as a whole which makes your accounting complicated.
Why should someone make 1.5% when I buy groceries for my family ?
The problem is essentially a problem of value transfer from one person to another. Its a transaction between two people and the banks are getting in the way eating a commission. Banks have a relevance in the current system because they are the ones that maintain the trust, the ones that ensure that the digital representation of value (money) gets transferred. For they they currently use centralised ledgers and charge a heavy fees.
There is also the problem of cards and card swiping machines. There is no need to waste money on that clumsy little hardware when you have computers and mobile phones. No need to pay the rent either.
Ive been researching cryptocurrencies for sometime now and even mined a few of them, did some transfers to see if the whole thing works. Looks like it does. I have a some Ethererum on my phone wallet right now. The technology behind all these is wonderful as they have successfully managed to solve the problems of double spending and transaction verification without a central middle man. Essentially they have made the banks redundant (from a payments perspective)
So what I am going build is a cryptocurrency network which uses INR itself. The new currency will be called “CINR” and will represent INR for all practical purposes. We will accept INR and transfer exactly the same amount of CINR to digital wallets. The transactions on this network will be enabled by the same blockchain technology that powers bitcoin and Ethereum. The nodes that do the ledger maintenance can be run by anyone.
The bigger problem
To implement this idea I need to be a bank as most of the stuff described above comes under the banking domain, which means approvals, compliance etc. So Im going to buy a small bank. If anyone knows a bank who is selling Im willing to buy. BTW Im running a little short of cash right now to buy a bank, so looking for a few investors. Any idea how much money is needed to buy a bank ?