how I created a crypto payment service

In 2021, I decided to start a business in the crypto field. I thought that I would quickly launch it and gain an audience of millions. But everything turned out to be not so simple. I had to move to another country, spend months on useless development, and lose all my clients for six months. I’ll tell you how it all happened.

Hello, my name is Georgios Kalmpazidis, and I am the founder and CEO of the crypto payment service Swaps. This is a payment instrument that allows businesses and ordinary people to legally use cryptocurrency: buy (Buy), sell (Sell) or accept payment (Receive). Now Swaps can be called a successful project: it is available in 200 countries and continues to grow, but it was not so right away. Let’s talk about everything in order.

We created a product with one function – buy cryptocurrency

2021 was a turning point for the crypto world. Cryptocurrency prices grew, funds invested large sums in blockchain projects, and Bitcoin was recognized as the official currency. I have seen with my own eyes how the topic is gaining popularity.

It became clear that companies will soon want to massively use crypto as a means of payment. But conducting financial transactions with cryptocurrency through gray schemes is risky, so businesses need a tool that will allow them to legally buy, sell and transfer coins.

I thought that I could make money not by investing in crypto, as everyone else did, but by creating a convenient tool for using it.

Just like during the gold rushes, you need to concentrate not on finding gold, but on selling shovels for gold miners.

There were already similar services for working with cryptocurrency, for example MoonPay and Simplex. But they focused on the USA. We wanted to work for the whole world and make the transaction cost lower than everyone else’s. To achieve this result, it was necessary to choose the right technology.

The first version of the product had only one feature – Buy. It can be used by both end users and businesses. With end users, everything is simple: a person chooses which crypto he wants to purchase and what fiat currency he is willing to pay for. And for businesses, this is an entire infrastructure that is integrated into the website and allows you to accept payments from clients. We take care of all issues related to payments: we provide protection against the risk of working with fraudsters, carry out the KYC procedure, that is, we identify the identity of each client, and carry out the transaction itself.

Swaps for Business is a framework that helps companies onboard users. The client will be able to make a purchase on the company’s platform: he will select the amount to pay, the currency in which it is convenient for him to do this, and deposit the money. We take care of all aspects of personal identification and protection from fraudsters.

With Swaps, companies can make cross-border payments with low fees. For example, a travel agency has a website where clients can choose a tour and pay for it. If the client is from another country, then when making international payments through regular banking systems, the overpayment can be 10–15% or higher due to commissions and unfavorable currency exchange rates.

In order not to lose customers, the company integrates Swaps into its website via API. The client pays for the purchase in his usual currency with a commission of 3.99%, and the seller receives the equivalent of the payment amount in crypto. After this, the company can withdraw the crypto in fiat currency to a bank account and card: this will be displayed as a transfer from a European company. Or it can pay with the same crypto to counterparties and customers.

Spent more than a year registering a business

Payments and blockchain are two of the most complex industries for business, and if you combine them, the complexity increases exponentially. At the start, it seemed to me that this was quite simple to do: you just need to connect the payment system and send the crypt. This was a big mistake. When we started working on the project, we encountered a lot of difficulties, lost a lot of time and money due to erroneous hypotheses and external situations that we did not foresee.

The first problem appeared even before work started. We decided to register a company in Estonia because it offered attractive conditions for working in the crypto field. The license, which allows the provision of financial services, cost approximately 300 euros. But soon there were changes in legislation, and the conditions for obtaining a license became stricter. For example, one of the requirements of the FIU, the body that regulates financial activities and issues crypto licenses, was the permanent residence of one of the directors in Estonia. So I had to move. When I finally had the license in hand, it took me about another year to open a bank account. The company is registered – hurray! But the problems were just beginning.

Invested time and money in developing their technologies, but ultimately abandoned them

During the existence of Swaps, there were many failed hypotheses. Often the reason was that we did not take ready-made technologies, but wanted to develop our own from scratch. I’ll tell you about two situations that were resolved in one way:

1. Bitcoin node. In order to be competitive in the crypto payment services market, we decided to make minimum commissions for users. Conducting transactions through the exchange, as competitors do, was unprofitable for clients. Therefore, I came up with the idea of ​​​​raising my own Bitcoin node – a server for storing the cryptocurrency blockchain, which would allow transactions without an exchange. The team supported me. The developers believed that our solution would be cheaper and more reliable.

We started creating a server, but soon realized that it was very difficult to maintain the operation and ensure the security of such an infrastructure. It is better to use a ready-made solution that makes it possible to send not only Bitcoin, but also thousands of other coins.

2. Payment processing. Another failed idea was the development of our own payment processing technology. I was confident that I needed to process payments on my platform. Switching to another page for payment may cause distrust among users, and they will refuse to use the service. Imagine yourself – you go to a website, are about to buy something, and they redirect you to an unfamiliar page and ask for your card or wallet details. Suspicious.

To accept payments on our platform, we had to develop our own card payment processing process. At the same time, the technology must comply with the international security standard – PCI DSS (Payment Card Industry Data Security Standard). Organizations that store, process and transmit card data are required to apply it.

We spent a lot of resources on this development, but when we started using it, we realized that it did not cover all our needs. We need another solution.

One product solved two problems at once. We found Stripe.

Stripe has the largest global coverage, the fastest payment processing technology, and the most favorable terms for partners. Moreover, users trust it.

It took us six months to become their clients: Stripe has a long legal process for starting cooperation with companies that work with cryptocurrency. You need to meet their requirements, analyze all transactions, have licenses and good protection from fraudsters.

When we finally connected Stripe, I realized that the company had spent several billion dollars creating the payment page. We definitely wouldn’t make the same one, but we can use their solution.

We changed the interface to make the transition to Stripe even more seamless

If you ask Swaps users what they like most about the service, the clear and friendly interface will definitely be in the top 3. This is a sore point in crypto projects: an unadvanced audience often does not understand what is happening on the screen, where to point and to whom they are sending money. We managed to develop a product that even a child could understand, but one thing was still confusing.

I already said that we chose Stripe because it is trusted by people all over the world. But I wanted to improve the user experience – to make sure that people didn’t notice the transition to the payment page. Many companies solve this issue this way: they make the payment page as similar as possible to the design of their service. We did the opposite.

At one of the conferences, Stripe gave public access to their UI kit, on the basis of which they assembled a dashboard for business users. It was made available to all applications that interact with Stripe. We decided to use it for the UI of the entire service. The result is that the transition from the widget to the Stripe payment page is seamless from a design perspective for the user.

We were left without users for six months, but we added a new function – sell cryptocurrency

The first year of our existence we were just gaining a client base, in the second year everything stabilized – users appeared and began to make a profit. And in 2022, LUNA and FTX collapsed.

In the summer of 2022, UST suddenly lost its peg to the dollar, and its associated LUNA token plummeted in value. This happened after an investor put up about $300 million worth of UST tokens for sale, causing panic in the market. As a result, the rates of LUNA and UST collapsed.

After this, in the fall of 2022, a large cryptocurrency exchange, FTX, collapsed. First, an article was published claiming that the owner of FTX was using illegal schemes. And then the founder of the Binance exchange, a competitor of the FTX exchange and a major investor, announced that he did not believe in the viability of the FTX token and was selling it. Many people succumbed to panic and began selling FTX tokens.

Of course, confidence in the cryptocurrency market has plummeted. Bitcoin has more than doubled in price. Everyone started selling crypto, but we couldn’t even satisfy the demand for sales, since we didn’t have such an opportunity yet.

For six months we had no users at all. Following this story, we developed the Sell function, which allows you to sell cryptocurrency.

We integrated Open Banking technology for six months, but nothing worked

For the new Sell feature, we wanted to use Open Banking technology as a payment method. This technology allows two bank applications to interact with each other directly, without intermediaries. To send money to the user, they do not use SEPA – the common euro payments area, which allows you to transfer euros under the same conditions within the European Union and a number of other countries. Instead, one bank’s application connects via API to another bank’s application, the user gives authorization, and the payment goes through immediately. And the transaction has a low cost.

We have agreed to integrate with True Layer, a company that uses Open Banking technology. The technical process lasted about six months. And as soon as we completed it, Silicon Valley Bank, one of True Layer’s partners, collapsed. Against the backdrop of the collapse of crypto assets and the collapse of the FTX exchange, depositors began to withdraw money from the bank en masse. In order to give money to depositors, the bank was forced to sell a package of securities at a significant loss. On the same day, the bank’s shares fell by 60%. Because of this scandal, True Layer decided to reduce risks as much as possible and refuse to work with companies that do not meet its internal criteria. They also refused us because our licenses did not match. At that time, we had Canadian and Estonian, and True Layer required a German or English license from a financial institution.

We added a new Receive function, which allowed us to accept payments in cryptocurrency

When problems arose with payments between different countries, I began to study the situation in the world. In Africa, for example, 70% of people can explain what blockchain is, and almost 60% use crypto. For them, this is a real opportunity to escape the risk of currency volatility. They don’t need traditional banks.

I realized that sometimes users need to receive crypt from people who often do not even have this crypt. I got the idea to create a product that would cover this user scenario. The person specifies the amount and wallet address, generates a link and sends it to the payer. He pays in fiat, and the money is converted into crypto and dropped into the recipient’s wallet.

This is how Receive was born. It allows the user to accept payment in cryptocurrency from any country with a low commission. When paying by credit card, the commission will be 3.99%, and when paying through the SEPA bank transfer system – only 1%. When creating a link, you can specify who pays the commission – the sender or the recipient.

By the way, receiving a transfer via Receive is currently the only feature available to users from Russia. It is not possible to buy and sell cryptocurrency on the site, nor is it possible to send a transfer. But you can receive payment from foreign customers for services or accept financial support from loved ones who live abroad.

If you have a driver’s license or residence permit from Kazakhstan, Turkey or other countries, then you can use all the capabilities of the service: send transfers, buy and sell crypto. And if you have a business that is not registered in Russia, you can integrate the service as a means of payment, as well as hire performers from Russia and pay for their services through cryptocurrency. In general, there are many options.

I was choosing between Kiev, Moscow and Yerevan to open an office

Continuing the topic of sanctions restrictions. When we received a confirmed first round from an investor, we had to decide where to open an office with developers. The choice was between Kiev, Moscow and Yerevan.

The first MVP for us was collected by a team from Yerevan. We offered to completely buy out their office and booked our presence in this country in 2021. After a while it became clear that this was the best option. Now there are 20 people in our team, all of them are very strong specialists.

Here are my conclusions

I’ve learned a lot in the three years I’ve been working on Swaps. I would like to share my findings with entrepreneurs:

• Don’t waste resources reinventing the wheel. If there is a ready-made solution, you need to use it. Companies have already made many mistakes to arrive at a working version of the product. You shouldn’t console yourself with thoughts that it will turn out better, more reliable, and of higher quality.

• When creating your startup or product, you need to take care of its legality. This makes it possible to grow and expand the business. It is better to find out in advance what documents will be required and allow more time for bureaucracy.

• Don’t count on quick success. Even if all the steps are calculated, something will always go wrong. It is impossible to foresee everything.

In fact, the mistakes I’ve made are just a journey. After each failure, I thought: “Okay, this already happened. What to do next?” With experience, it becomes easier to make new decisions and move forward.