Streamlining crypto payments: why we invested in BoomFi
By Sep Alavi, General Partner, & Robin De Baets, Analyst
We’re proud to announce BoomFi’s $3.8m seed funding round led by White Star Capital. BoomFi is a next-generation payments company that helps merchants accept multi-chain crypto payments for any pricing model in minutes.
Stablecoin adoption has continued to grow despite the market downturn of 2022, with over $7tnsettled last year in dollar-pegged coins like USDT and USDC, surpassing even the settlement value of Mastercard which processed around $2.2tn in value. Worldpay and Crypto.com’s survey reveals 60% of 1.5 million merchants are primed to accept crypto, yet only 4% are currently offering this option.
With crypto’s benefits of lower fees, instant settlement, and reduced fraud rates, demand for robust, user-friendly crypto payment solutions is surging. Yet, payment technology supporting this new currency has not taken off. The success of day-to-day payments in crypto will require not just the evident demand from consumers, but also the willingness and ability to accept cryptocurrencies from merchants.
So, what are the benefits of accepting crypto payments for merchants?
1. Cost-savings
When accepting fiat payments, merchants need to pay a host of intermediaries, meaning their cost of acceptance includes interchange, scheme, acquirer, and sometimes even chargeback fees (the total cost of which exceeds $30bn per year). When adding up to 2–10% of a transaction, this can make a huge difference to merchants’ bottom line.
Meanwhile, blockchain payments cannot be reversed, so chargebacks are impossible. They have a fixed transaction-fee model for settling transactions on-chain, which are usually insignificant, and there are no intermediaries to negotiate fees with, everything is open and accessible.
2. Instant settlement
Traditional online payments don’t instantly clear. Typically, it will do so the following day but can take longer depending on the nature of the transaction, customer, merchant, and goods sold.
With cryptocurrency transactions, the settlement of funds is instantaneous. Cryptocurrency payments enable instant, ‘always-on’ money, rather than waiting for funds to settle through SWIFT. This instant settlement means instant cash flow for merchants.
3. Customer growth
Expensive payment processors and acquirers, like Amex, manage to onboard merchants because they promise to bring wealthier clientele to their business, presumably increasing average basket size with them. Buy Now Pay Later also increases the size of the customer pool, by allowing users with lower or variable income to access credit at the point of sale.
Similarly, enabling crypto purchases will increase the size of a merchant’s customer pool, encouraging crypto-native users to choose their store over other exclusively fiat-based stores.
Other crypto payment solutions have come about in the last couple of years, but have not managed to take a meaningful share of the payment volume of traditional payment gateways. Their massive lack of flexibility and innovation makes them an unattractive alternative.
Enter, BoomFi.
The team behind BoomFi are erasing the complexities traditionally associated with accepting as a method of customer payment for both web3-native companies and traditional merchants.
It’s an all-in-one solution to address all aspects of the payment stack. The goal is to offer merchants a wide range of options to accept payments via one-time checkout, recurring payments, invoicing, and usage-based models.
Customers can pay in any major cryptocurrency on any major blockchain, while the merchant is paid out directly in fiat or a cryptocurrency of their choice. The fiat off-ramp is a crucial feature for Web2 merchants, allowing them to accept payments in cryptocurrency without having to worry about issues such as settlement, volatility and custody. Web3-native merchants can choose to get paid out directly in stablecoins.
BoomFi will make use of LayerZero’s omni-chain bridge called Stargate Protocol, which allows them to transfer native assets across blockchains. Additionally, they have already been onboarded with the liquidity provider Aquanow, which is a strategic investor in this round.
The team
Co-founded by serial tech entrepreneur Jack Tang and fintech product executive Michael Si, we were super impressed with the clarity of their vision and track record. They have spent the past couple of months on intensive product development with a strategic group of partners to streamline the product.
This round, which included backing from exceptional investors such as Passion Capital, Blockchain Founders Fund, Kraken Ventures, GSR and a strong circle of strategic advisors, will provide BoomFi with the capital necessary to accelerate product development, build strategic partnerships and expand the merchant base.
We’re really excited to see where Jack and Michael take BoomFi in the coming years. Check out BoomFi’s website here or reach out to jack@boomfi.xyz to learn more about adopting crypto payments for your business.
