Please tell us about your journey into the micropayment technology industry?
In early 2000, I architected and launched a Peer-to-Peer payment platform for one of the top retail banks at the time. Since then, over the last 17 years, the founders of Dropp have developed a wide range of FinTech products for large investment banks and early startups as founders of a FinTech solution firm called OpenCrowd. Dropp is a spinout from OpenCrowd. In the last five years, our focus is building distributed ledger technology (blockchain technology) based payment products.
The concept of micropayments has been around since the late ’90s but in the last couple of years, a few factors have made micropayments a real need and feasible both in terms of technology and economics:
- Significant growth in the digital economy: Over the last 20 years, digital services usage has increased exponentially across many industries, from media to cloud data to health. Post-pandemic, the use has even grown further. With the steady launch of new services, the world population is now even more comfortable with digital services ranging from video conferencing, e-learning, video streaming services to new experiences like virtual visits to the doctor. Digital life will continue to dramatically expand and will impact almost all aspects of daily living. We expect with the new demand a steady launch of new digital services purely out of necessity, let alone convenience. This will lead to a significant opportunity for technologies that support efficient monetization and low-friction acquisition of digital services by consumers.
- Consumer Need: Despite the tectonic shift to digital, there has been limited innovation in the monetization of digital services. A typical digital merchant either offers services to customers on a subscription basis or, in many cases, for free while displaying ads that provide a poor consumer experience. Privacy is increasingly becoming an issue. Both business models have reached a saturation point. Consumers are either overloaded with subscriptions, with many households just can’t afford them, or at least multiple subscriptions for similar services. We at Dropp believe that a “Pay-Per-Use” model, where customers only pay for what they use, can be a more appealing proposition. Most of us would love to read a news article for 20 cents or just watch an episode for 50 cents without committing to a long-term plan. As we analyzed this need, we came up with hundreds of use cases where consumers would love to buy in small portions. We believe there is a mega opportunity in this economy of micropayments.
- Technology matured: Distributed ledger technologies made payments easier as the ledger is specifically built to track the transfer of value and ownership. But in many distributed ledger technology or blockchain platforms, the transaction cost is very high, and the throughputs are anemic, making it impractical for microtransactions. Our initial motivation to build the platform came out of our development partnership with Hedera Hashgraph. A unique public distributed ledger network that is known for very low latency, high throughput, and low transaction costs. Many of the attributes of this network exactly match the requirements of micropayments. Right after the launch of the Hedera network, we started our work on the initial concept in early 2020. We saw the need for a micropayment platform built for mass adoption to leverage the security and transparency of distributed ledger technologies but should hide the complexity.
Whether consumers need to pay for parking spots, charging stations, premium content within the car or groceries, updated tech in smart cars will make it possible to handle financial transactions from behind the wheel.
How Dropp got to where we are today is a combination of decades of passion for innovation in the payment space, the technology catching up to our digital vision, and customer preferences fundamentally shifting in our direction.