As financial technology startups continue to revolutionise the industry, an Irish fintech company is looking to “democratise finance”.
Greg Chew, CEO and co-founder of QPQ, describes his company as a “settlement platform for goods, services, and payments, with integrated trade and corporate finance.”
QPQ refers to ‘quid pro quo’, and the company aims to serve any size and type of business, from small companies to global enterprises. Earlier this month, QPQ filed three patents, for the creation of “smart legal contracts”, with the UK’s Patent Office.
“Smart legal contracts” are legally-binding contracts, converted into computer code, which govern interactions between parties to the contract and other stakeholders, such as regulators. The technology aims to automate many business functions, eliminating paper-based processes and reducing costs and risks.
Mr Chew, a trained barrister and asset manager, was involved in setting up farming, mining, and energy co-operatives in Africa, when he began to look at ways of levelling the playing field for smaller enterprises to access markets and finance.
This led to the creation of the world’s first unitary platform to access 84 world markets with integrated digital settlement (assured, concurrent, electronic transaction settlement).
QPQ is a cumulation of 16 years of work by Mr Chew. The launch, earlier this year, of distributed ledger technology (DLT) platform, Hashgraph, provided the technology to make QPQ possible.
We use this to remove the need for trust from the processes involved, so, in a way, the DLT provides the railway. We put rolling stock on that railway.
Blockchain, which Mr Chew describes as “version 1” of DLT, creates the opportunity for people to trust the data, rather than the vendor of the data. Hashgraph goes further than this, paving the way for digitalisation. Smart legal contracts are the key to digitalisation: using code to eliminate inefficiencies, Mr Chew says.
“To date, what we’ve seen has been digitisation: making the inefficient slightly more efficient. We’ve moved from sending an invoice by post to sending an invoice by fax to sending an invoice by email, but, ultimately, they are still the same, inefficient processes.”
Digitalisation removes those inefficiencies completely and replaces them with code. So, for example, if a set of goods were transacting across a border and those goods were environmentally sensitive, there would be layers of regulatory reporting, customs reporting, and environmental reporting required. There would be a number of different service providers. All of these elements would be encoded into the system.
QPQ’s revenue model is based on a token offering. Users purchase digital exchange quid (DXQ) tokens to access the “ecosystem”. The one-off payment is related to turnover. So, for example, a company in the band between €20m and €25m would need to hold the value of €250,000 in DXQ.
Mr Chew says that the utility token has been mischaracterised. He compares it to “golf club membership that provides you with access to a service”. QPQ intends to keep fees low — 1% of transactional value — for members.
Tokens increase in value with utilisation, he says. “It’s like, if you don’t go to the gym very often, the membership is not worth very much to you. But if you go to the gym every day, it’s worth a lot.”
Customer discoveries with companies in the US and Europe have found that QPQ can deliver an average saving of 9.65% to a company’s bottom line.
Instead of developing incrementally, as investment comes in — as many fintech companies do — QPQ is concentrating on getting the architecture right.
Mr Chew said: “Someone said to me, ‘oh, you’re just designing a building. Why don’t you get on with building it?’ I said, ‘because we’re not building a building; we’re designing New York City’. We have to map out every single piece of the puzzle and make sure it’s fully scalable.”
The team has bootstrapped to date. Mr Chew says the next step is to raise funding to build the platform, before testing, with the aim of making QPQ operational in two years.