Company
Arf
use case
Treasury operations, cross-border payments
Industry
Fintech
Country
Switzerland, Turkey

About

Arf

Arf is a global settlement banking platform, eliminating the capital-intensive business model of the cross-border payments industry by offering digital asset-based working capital and settlement services with native on-ramp and off-ramp capabilities to licensed money service businesses and financial institutions. Arf serves as a regulated strategic partner for e-wallets, neobanks, FX providers, digital remittance companies, and payment companies.

Challenge

As payments technology grows more sophisticated, customers expect cross-border payments to be faster, cheaper, and smoother than ever. However, the money-service businesses (MSBs) responsible for facilitating these cross-border payments are constrained by the traditional correspondent banking infrastructure and by limited access to liquidity. 

Cross-border payments still take several days to settle through the world’s most used networks including SWIFT. This is why even though the KYC and compliance portion of a payment can be validated quickly, the money itself does not transfer at the same speed. Instead, this money must first pass through a correspondent bank before arriving at its final destination.

Thus, as transactions scale, MSBs require increasing amounts of pre-funding capital in order to keep balances in accounts across different countries before the payment actually arrives. The amount of pre-funding capital needed to facilitate large flows of cross-border payments is often inaccessible to new entrants such as challenger and neo-banks, barring much-needed innovation from the industry.1 Even large companies and unicorns struggle; they have to constantly go to liquidity providers or banks to ask for more money as they try to keep up with demand.

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“Stellar is one of the top players in the cross-border payments industry when it comes to blockchain. It has also been tackling this cross-border payments problem for a very long time.”
Ali Erhat Nalbant
Co-founder and CEO · arf

Solution

Arf saw how this type of capital-intensive business model could prevent MSBs from being able to solve the pain points of the cross-border payments industry. As a global settlement banking platform, Arf aims to solve this problem by providing MSBs a wide array of services ranging from global treasury management to stable-coin based credit lines. 

Interoperability is the key

  • What sets the Stellar network apart from other blockchains is its interoperability. Stellar can interoperate with other blockchains and traditional financial infrastructure via regulated financial institutions called anchors. Anchors can issue assets and/or provide on/off ramps onto the Stellar network.
  • A self-described “meta-anchor,” Arf has established on/off ramps to multiple countries including Colombia and Turkey. By integrating Stellar Ecosystem Proposal (SEP) 31, Arf can now facilitate payments between two financial accounts outside the Stellar network.

A Thriving Ecosystem of Potential Partners

  • The Stellar ecosystem consists of hundreds of active projects and dozens of anchors. By actively participating in the Stellar ecosystem, Arf has connected with other companies in the payments space and can now offer them access to its own on/off ramps.
  • For example, Arf and ecosystem member Tempo Payments built a fully compliant corridor to facilitate cross-border transactions between Europe and the Philippines. Since Tempo has already integrated onto Stellar using SEP-31, they can easily on-ramp remittances in Euro onto Stellar and over to the Philippines in pesos via Arf’s off-ramp without the need for a correspondent bank.
  • However, even if a MSB has not integrated with Stellar at all, they can still easily on/off ramp onto the Stellar network using Arf’s API and dashboard. Now, MSBs have access to payment rails across the globe thanks for Arf.

USDC on Stellar for Quick, Easy Settlement

  • Arf sought to leverage the world’s fastest growing USD stablecoin in combination with Stellar’s fast and secure payment rails. Circle and the Centre Consortium are responsible for issuing USDC on Stellar, ensuring the stablecoin is fully compliant and trustworthy to use. Now, MSBs holding their treasuries on Arf don’t have to worry about KYC or compliance when sending and receiving payments cross-borders.

Results

$60M
per month in transaction volume
$250M
per month in projected transaction volume by Eo2022
500
prospective members of Arf network

Arf has seen remarkable demand for its services, and has ambitious plans for expansion. The company is currently operational in 20 countries and planning to add 40 more countries to the roster. In addition, Arf has more than 500 businesses in its membership pipeline, with nearly 200 of them vetted and ready to move forward with licensure and get started using Arf’s payment corridors.

To widen its global reach, Arf is looking to make running MSBs easier through new offerings. Recently, it launched a credit line so that MSBs could instantly access transactional working capital credit lines, allowing any corridor to be post-funded in real-time, and worry less about amassing large amounts of pre-funding capital in the first place. Arf is also exploring providing debt facility and other competitive advantages for MSBs, all so MSBs can enjoy same-day settlement, same-day transfer, and greater access to new markets.

¹ https://www.ey.com/en_ca/banking-capital-markets/how-new-entrants-are-redefining-cross-border-payments

“We all know Stellar and how it can support a wide variety of assets including stablecoins. It's a go-to blockchain that any kind of money-service business or financial institution can use.”
Ali Erhat Nalbant
Co-founder and CEO · arf

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