Blockchain just had two major firsts with new social payment app Circle, Barclays and Britain's financial regulator

 
Lynsey Barber
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Circle has launched in the UK (Source: Getty)

London may be the centre of fintech innovation, but there’s one huge trend we’ve failed to jump on board with yet - social payment apps.

Messaging your mate with that fiver you owe for last night’s round at the pub and a big smiley face emoji is pretty common in the US and China, especially among millennials.

Across the pond, PayPal-owned Venmo is the go-to app and processed more than $1bn worth of payments in a single month for the first time in January. Alipay and WeChat in China have similarly huge adoption. So-called “red envelope” cash gifts sent from one person to another digitally totalled 8bn on Tencent’s WeChat over Chinese new year.

Now, one startup wants to make money transfers with emojis and messaging mainstream in the UK and the rest of Europe, and blockchain and Barclays is helping make that happen.

Circle launches today, letting users simply and securely transfer money but with the messaging - including emojis - you’d be more used to finding in WhatsApp, SMS or Facebook Messenger, all instantly and for free.

Transferring money shouldn’t be about doing banking admin, according to Circle, it should be as simple as sharing an update on social media. “We wanted to weave money into ways we already use the internet,” said Jeremy Allaire, founder of Circle, speaking to City A.M.

“We’re accustomed to free content and information online, but money doesn't work that way. But cloud, AI, blockchain and other technologies can change that and make it instant, free and fun. Email isn’t a cross border thing. We just don't think about that in that way. We wanted to make money work that way too."

Circle started out three years ago as a bitcoin wallet and has since expanded into broader currency payments. Blockchain, the underpinning technology of the cryptocurrency, also underpins Circle's money transfers and bitcoin is still used for cross-border payments, with local bitcoin wallets being used to exchange into local currency.

If you were paying someone in the UK or US, where Circle launched last year, it would be converted from one currency to another. However, if you want to transfer money to a friend in another country for instance, the cash would be converted in to bitcoin and then, for example, bitcoin wallet Unocoin in India would exchange it into rupees.

It’s this innovative use of blockchain tech allows transfers to be completely free.

Blockchain firsts

Barclays is on board as a banking partner for its UK launch. Circle can hold and transfer money and make international payments as an e-money company but can’t directly take deposits, but, that’s where the bank comes in. In the US, it’s understood to be Silicon Valley Bank which plays the same role.

It’s the first time Barclays has partnered with anyone using blockchain technology and for the UK financial regulator, it’s also a first. Circle is the first firm using blockchain tech to be issued with an e-money issuer licence by the FCA.

“Britain’s FinTech industry is growing all the time and I am proud the government is playing its part,” said City minister and economic secretary to the Treasury Harriett Baldwin.

"Circle’s decision to launch in the UK and the firm’s new partnership with Barclays are major milestones. Together they prove our decision to introduce the most progressive, forward-looking regulatory regime is paying off and cements our status as the world’s fintech capital.”

Circle is one of the first tech companies to launch a consumer facing blockchain product. “Hopefully it’s a positive thing for lots of other companies” said Allaire, who previously founded the online video company Brightcove. On the partnership with Barclays, he said: “One reason is that in the UK, Barclays stands out as pretty aggressively trying to standout as being at the forefront of blockchain technology.”

With rumours of Facebook integrating mobile payments into its Messenger app and experiments by Barclays and French bank BPCE to send money via tweets, Circle

“We’re part of a wider experiment, and it all makes sense. We look at it competitively but also comparatively,” said Allaire of the competition, revealing that working on a similar integration could “potentially” happen. “In theory you could tweet using Circle with API integration.”

How does Circle work? 

  • Circle is available on iOS and Android, as well as web-only, and can be used with any UK Visa or Mastercard credit or debit card.
  • Cards are linked up and transfers can be made from your account to Circle or directly to another person.
  • Cash can be transfered with just a phone number, email address or with your phones NFC or bluetooth.
  • Users can also make requests for transfers.
  • People you transfer money just need to sign up with email. They can leave the cash in Circle as a digital wallet (up to £200 initially), which can then be used to pay someone else. Or, they can link up a card to "cash out" and put the money in their account.

Circle boasts $76m from investors such as Goldman Sachs, Accel Partners and IDG Capital Partners among others, plans to roll out across Europe and support euro currency exchange by the end of the year. But for the moment plans to get the word out about Circle, where else, but via digital.

“With consumer internet products, the best ones sell themselves and have in-built network effect and we are working on features that really build on that behaviour,” he said. After all, you didn't hear about Facebook from a billboard ad, it was from your friends.

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