SoftBank veteran looks for profits in payments infrastructure plumbing

In the summer of 2020, as pandemic-induced volatility swept markets, SoftBank Group shocked Wall Street with a series of massive options bets on US technology stocks. Behind those deals — which earned SoftBank the nickname “Nasdaq whale” — there was… Akshay NahitaHe is an executive whose career has been characterized by bold bets on disruption.

Now, after orchestrating multibillion-dollar deals, including an attempted merger of Nvidia and ARM, Naheta is making perhaps his most ambitious bet yet: that the world’s payment infrastructure is ripe for reinvention.

His startup Zug, based in Switzerland, Distributed technologies research (DTR), is trying to bridge the gap between traditional banking technology and blockchain technology, joining an army of companies trying to modernize the global payments infrastructure.

The startup claims that its technology can eliminate various payment inefficiencies, from transfer costs and interchange fees to foreign currency conversion fees and settlement delays. “Existing payment networks suffer from inefficiencies — transfer costs, interchange fees, foreign currency conversion fees, settlement delays and other arcane fees,” Nahita told TechCrunch in an interview.

DTR’s underlying technology, AmalgamOS, essentially connects banks to blockchain networks. Through APIs, it allows businesses to integrate payment capabilities while maintaining compliance with local regulations. The system can handle everything from merchant payments to treasury management, and supports both fiat currencies and major stablecoins in 48 countries.

The startup has built what Nahita describes as an “international orchestration network” that automatically routes transactions through traditional banking or blockchain paths, depending on which path offers the optimal mix of speed and cost. “We are linked to 12,000 banks in Europe,” he said in an interview. Businesses that integrate DTR’s APIs can allow their customers to initiate transfers directly through banking applications.

DTR’s push into payments infrastructure comes at a seemingly opportune time. Visa and MasterCard – both Charge a pass fee of 2-3%which is typically the second-highest cost to merchants after payroll — faces increasing scrutiny over its duopoly, and a proposed U.S. credit card competition law could require banks to offer merchants alternatives to dominant networks.

DTR’s early customers say its infrastructure fills a major gap. Philip Lord of Oobit, a cryptocurrency wallet startup, said the system allowed his company to move money from his crypto wallet to a UK bank account on Christmas Day in less than 30 seconds — a transfer that would have taken days via traditional channels.

Naheta’s interest in payments infrastructure stems from an unexpected source: SoftBank Acquisition of Qalaa Investment Group In 2017. The deal put about $20 million worth of Bitcoin on SoftBank’s balance sheet.

While studying the underlying blockchain technology, Nahita says he saw an opportunity to apply his background in wireless communications to payment networks. While at SoftBank, Naheta began assembling what he hoped would be the founding team of DTR. He reached out to his college thesis advisor, Pramod Viswanathan expert in wireless communications who now leads the Blockchain Center at Princeton and… Sriram Kannanwhich will start later Eijin layer.

The team saw blockchain technology as essentially a peer-to-peer communications network, one that could apply decades of research into wireless systems to revolutionize payments. Nahita said he was close to resigning from SoftBank in the summer of 2018 to focus on DTR and the cryptocurrency project Bakkt, but was persuaded to stay by senior executives, including Rajeev Misra and Masayoshi Son.

Nahita’s previous forays into the payments sector also included SoftBank’s investment in Wirecard, which later collapsed. SoftBank still makes profits from its investment in Wirecard. “I made a lot of mistakes,” he admitted. “I looked at it from the perspective of, this is a company that has all these regulated licenses around the world, and they clearly own the payments technology.”

These experiences appear to have influenced DTR’s focus on compliance and institutional credibility. This measured approach extends to the company’s growth strategy. “Even if you increase headcount to 60 people by the second quarter, free cash flow will be positive,” he said.

The startup faces competition on multiple fronts. Wise has built a successful business for matching currency flows between countries, Ripple offers blockchain-based settlement despite its legal issues, while traditional banks also say they are modernizing their systems through initiatives like SWIFT. Last but not least, Stripe The recent $1 billion acquisition of Bridge It aims to help the world’s most valuable fintech startups make deeper progress in payments.

However, Nahita sees an opportunity in serving companies stuck between these two worlds – especially digital nomads, creator economy platforms, and companies operating in emerging markets.

He said: “Banks are not equipped to manage the know-your-customer and anti-money laundering process at such a small level, where they pay between 200 and 10 thousand people per month.” The fragmented nature of national payment systems creates particular challenges for companies operating globally, as each jurisdiction maintains its own issues and systems.

The high margins and network effects in the payments industry make it very difficult to disrupt. PayPal has a market cap of $70 billion even after recent declines, while Visa and Mastercard combined are worth more than $1 trillion.

“I really think retail customers are getting stuck on payments,” he says. “And it’s not the banks’ fault. They’re wired into legacy systems, and it’s very difficult to convert the Titanic.”

The Lord of Oobit said in an interview that the field is still wide open. He noted that even just a year ago, the only option for businesses that needed to navigate between cryptocurrency and traditional banking systems was “to go to an OTC store and pay probably 1 to 3% to transfer.”

“It’s crazy that for so many years, we had so many startups, so many coins came out, and whenever you wanted to do an on-ramp or off-ramp project, there wasn’t any other formal system of legal ideas around it,” he said. The solution offered by DTR It is a “faster block” of alternatives.