Watch: Sushil Prabhu shares Dropp’s vision in CoinDesk Interview
August 23, 2023
Dropp CEO Sushil Prabhu shared his vision “Dropp bridges the existing gap between traditional banking rails and distributed ledger technologies like Hedera Hashgraph. By harnessing the key attributes of both technologies, we empower consumers with seamless payments using both FIAT and digital currencies, while delivering merchants a remarkably cost-effective credit card alternative.”
Watch the full interview at CoinDesk
Full Interview Transcription:
Despite Bitcoin’s recent bloodbath, Hedera’s HBAR token has risen nearly 16% in the last two weeks, as the Federal Reserve’s instant payments platform FedNow, listed Dropp as a Hedera-based micropayments platform as a service provider. Joining us now to discuss this Dropp CEO, Sushil, Prabu. Welcome to the show, Sushil.
Sushil Prabhu (00:20)
Hey, good morning. Yes, thanks. Thanks for inviting me.
Of course. Thanks for being here. Now, Dropp allows micropayments in Hedera’s HBAR, the US dollar and Circle’s USDC. Just briefly give us an overview of Dropp and how it works.
Sushil Prabhu (00:38)
Sure, absolutely. Dropp is a micropayment platform. It’s an extremely cost-effective platform built to support both Fiat, which is US dollar in our case, and digital currencies like USDC, stablecoins. It is… Consumers are looking for more choices in terms of payments, and merchants are looking for a very extremely cost-effective platform. We’ve built Dropp based on three key drivers that we see in the market. One of them is 50% of the consumer-reported payments are under $25, and there is no cost-effective payment platform out there to enable payment in small payments. The second big train that we see in the market is a global emergence on instant payment rails, which is where the FedNow comes in. There is a global emergence of instant payment rails, both in terms of the banking rails and in terms of the digital currencies. But these are just rails. There is no payment capability on top of those rails, and that’s what Dropp provides. The third key aspect, which is again why FedNow is quite relevant to us, is there has been lots of studies out there that for mass adoption, consumers prefer digital wallets provided by their bank as long as it has all the other features that they’re looking for, is rewards and buy now, pay later, all of those services.
Sushil Prabhu (02:09)
So we built Dropp specifically for this market, which is small value transactions, instant payments, and then you can pay via bank. So that’s what Dropp in a nutshell is. It’s built on Hedera, Hashgraph. That’s why Hedera is very relevant to us. We use Hedera, Hashgraph’s ledger for managing the ledger itself.
When you describe it, it sounds like this product would be very useful in developing nations with lots of small business owners who have to do a lot of microtransactions. Was this built with the US market in mind as one of the initial use cases? Or were you thinking of more of the developing world who have a need for micropayments like this?
Sushil Prabhu (02:50)
Good question. Thank you. So most people, when they think about micropayments, first of all, they think about a small market. So first I want to tell you it’s a huge market. It is a market based in the US. You’re right, it’s a global market all over the world. One of the markets that we are initially focusing on, because I call it the low hanging fruit, is the digital market, the digital media market. Everything that you buy in the market right now, whether it is a newspaper, a watch TV, all of that is sold on a subscription basis. There is no cost-effective way for you to buy a product for a dollar. Because if you buy a dollar, you will spend 50 cents paying the transaction fee. Yes, you’re right. It’s a global market. The need is everywhere, and I think that’s the trend, instant payment, small value transaction for everyday purchases, and we are definitely focused on it. But we’ve started in US, and now we’re going to slowly… We also have AED, dirham, on our ledger. We’re going to be introducing UAE. We’re going to be introducing other countries too. But we started in US because there’s still a need in the digital media space here.
Sushil Prabhu (03:59)
Everything that you buy and subscription is a fair game for pay-per-use, and that’s what we’re promoting at this point.
All right. Now, just to clarify something for me, Dropp is being showcased by FedNow. Is there an official partnership there? Or what does it actually mean to be showcased?
Sushil Prabhu (04:17)
Correct. Thanks. The FedNow Showcase is a directory of banks and payment services that are going to offer FedNow payment services. It’s a way for these institutions like us to promote our products to other banks and credit unions or any other merchant who would like to use FedNow in the near future. It’s a way for them to promote. It is not an endorsement and it’s not a specific singular relationship. It is a way for us to promote. One of the things that Dropp offers is embedded payment system. We’ve been trying to promote our product or trying to distribute our product. Through our banking relationship. For us it becomes really relevant because we are going to form a relationship with the financial institution to offer FedNow instant payment services, and that would then be offered to other banks through which we’re going to distribute the product. It really is not a singular relationship between us or any partnership between the FedNow and us, but it really is a major step in the direction to offer instant payments to every consumer in this country and globally everywhere else.
Are you working with any financial institutions, any banks in the US right now?
Sushil Prabhu (05:37)
Yeah, several. We are working with several institutions for different purposes, with some way of working to actually distribute the product. When you create a bank account, you will be able to get Dropp as a payment services. With some other institutions, we are trying to offer real-time payments. We need their services. We need to work with the banks to offer it. Dropp connects to this financial institution. Through that, we connect to FedNow. There is another service called the RTP from the Clearinghouse. That’s also another second major rail that we have here. We definitely are working with this institution and we are going to have a phased approach as to how we’re going to be deploying instant payments.
Can you tell us which financial institutions you’re working with?
Sushil Prabhu (06:26)
That I can’t disclose, but we will. As it progresses and as we get ready to go live, we will. The first thing that we are going to do is have the merchant disbursement, which is merchants right now are getting paid through our system using ACH. That’s going to be changed to RTP or FedNow, depending on the merchant’s need. Then the second thing that we’re going to do is you will have payments. You’re funding a wallet to Dropp wallet. That would become instantaneous. Then the third stage will be complete instant payments where you could walk into a restaurant and pay instantly using your bank account. It’s a staged approach and we’re working with these institutions to offer that.
All right. We spoke about that HBAR token that pumped on the news that the FedNow is highlighting Dropp. Why did you decide to build on top of Hedera?
Sushil Prabhu (07:24)
That was the easiest decision that we made. Hedera, Hashgraph is really built for fintech applications. The speed of the transaction, it can do 10,000 transactions a second. When you talk about small value transactions, you’re doing small value transactions. That means you might do 10, 20 of them in a day. We needed the speed, we needed the volume, and Hedera has that. But the second important aspect is the cost of the transaction. Hedera Hashgraph has a fixed cost and it’s fraction of a fraction of a second, it’s 0.001. It’s a no-brainer when it comes to building a payment platform, I’m surprised how come others haven’t built their platform on Hedera. The third important aspect, which is more specific to Dropp as we promote our product, people are also interested in who’s behind this ledger. The governing council that they have in Hedera helps us. They have top financial institutions behind them. They have top companies like Google’s and IBM behind them. It all helps. It helps when they it’s open access, open source, and a large set of enterprises behind it as a governing council. If you look at the entire package, it becomes a very easy option to go for.
I got to ask you really quickly. You talk about micropayments for digital media. We hear a lot about creators getting paid on platforms such as X, new innovation happening. Do you see Dropp being used for digital creators on platforms like X and Instagram?
Sushil Prabhu (09:03)
I can’t comment on X, but I can tell you, you’re asking me a question which is so near and dear to us. One of the first thing that we deployed once we created the core platform is micro-tipping. The creator economy, most of the creators don’t really make a lot of money, and all of them go after subscriptions. What we built was a WordPress plugin. This is like early this year where you could just download the plugin and start accepting tips, which is similar to what the X and the rest of the companies are going to try to do. If I can get a dollar tip and pay as little as four to five cents as a transaction fee, then it’s a viable business, then it’s a feasible transaction, and we make that possible. You’re right. Digital media, micro-tipping is a part of it. But let’s not also forget there’s this whole world of small value transaction, which is connected devices. You’re paying for parking, you’re paying for your EV charging, or a EV charging company paying you credits for some things that you did for them. It’s not just payments, it’s also the micro credits.Micro royalties is one of the big items that we are promoting because we believe that it’s not about you paying, you’re also being paid for the services that you do. It has to be an extremely cost-effective way because you’ll be making these payments, you’ll be getting these payments, which will be 10 cents and 20 cents, and it has to be very cost-effective to make it possible. We make that possible.
All right, Sushil, we’re going to have to leave it there. Thank you very much for joining the show this morning.
Sushil Prabhu (10:39)
Thank you very much. Thanks for having me.
That was Dropp CEO, Sushil Prabhu.
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Dropp will attend Kinfo’s Real-Time Payments & Fraud Management Summit 2022. Dropp will showcase their work on RTP functionality and fraud reduction.