KetoPay - a service like PayPal, but just better.

We are a service like PayPal (send/receive money) with no transaction fees ( due to our unique business model). We also provide a fixed deposit wallet option where you can earn interests as high as 5%

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For clearing your doubts about this project, please refer to the FAQ in the end. Some people are pointing out that we also have to go through taxations, handle credit-card chargebacks etc. As our team had previously mentioned that these will come into picture once we are about to form a company. When we will form a company, we will have a dedicated team to handle all of this. On a small scale level , we have already shown how our business model was validated, which can be replicated on a large scale as well while considering all the intricacies related to forming a company.

To understand our Business Model , Please watch this Video Explanation

Inspiration

We are two students who just happen to be freelancers in India. During a meetup about 20 days ago, one major problem coincided when we were discussing about our freelancing journey over a cup of tea. The problem was simple - PayPal’s heavy transaction fees, a universal problem. “Then just leave PayPal?”, our third friend, Cole, suggested. “But PayPal is just so easy to use. Put an email and boom you are done. No complications”-this, created a paradox. “Then, should we use PayPal or not?” sighed the frustrated Cole. When Cole was about to pay for our coffee, I was taken aback. He had around $500 in the PayPal wallet. “Why do you have so much money in your wallet? Don’t withdraw it to your bank account?” “So easy to pay man”. Mind you, PayPal is not allowed to store money in wallets in India. But since he was an American, who was on a visit, there were no restrictions for PayPal. “Why don’t you put your PayPal money to use? Fixed Deposit or something? A better way, rather than storing in PayPal”, me, son of a businessman, suggested. “LOL, FD rates are very low in the US. 1-2%, not more. What’s the point in that?” “Well, the point is – “, American financial system shut my mouth. A bulb above the cashier flickered - I had an idea. Got over to my pal Om and explained what if we combine the two problems and created an amalgamated solution. “A platform like PayPal, but with no transaction fees, and an option to store money and earn good interests. Too good to be true right? How do we do it? And as simple as PayPal?” “We are going to do it. I have an idea”, Om actually smirked, no kidding. “But, how do we connect to banks from other countries?” This time, I grinned. “Open reddit, will you?”. Thanks to Rapyd, it had a ton of ads on Reddit, seemingly annoying, but not annoying any more. “Rapyd”, he shouted so loudly that all the eyeballs turned towards us. The sheer embarrassment, lol. We went out of the restaurant with an idea, with no intention of returning ever again.

What it does

Introducing KetoPay - a service like PayPal, but just better. You can send/receive money, to/from an email, from any part of the world, with no transaction fees. And, a wallet for storing money wherein you can earn interests as high as 5%. How cool is that? “Cole? Cole? Where are you? “

How we built it

Hard truth, idea was simple. But to build something closely related to a service like PayPal, you have to be cautious of all the nitty-gritty of the app. Adding sending/receiving money as a sole component is easy, but to amalgamate these with all the extra features of the app, managing storage, managing user data etc. could be very daunting. KetoPay, a web app, is built from the ground-up, completely from scratch. The backend is made from python flask and storage service is of Firebase. The front-end is of HTML, CSS, SCSS and we feel we have achieved a pretty decent look. Focus is given on user experience so that users can navigate through the website pretty easily. Jargon is kept to minimal. We could have extended it to a mobile app, but time was a real constraint here. We know there are more mobile users, but that will be a future scope of this idea, in the production level.

How are we different from PayPal?

First of all, we charge no transaction fees whatsoever (for transactions more than $1000) and just 1% fees (for less than $1000), unlike PayPal, which charges up to 5.5% for cross border payments. Secondly, we give our users a wallet where they can store money and earn interests as high as 5%. So, a $100 deposit would amount to $105 in a month or even higher if the interest rate is high.

Our unique Business Models – the root of this business

We follow two business models – one for transactions and the other for the wallet. The basis of the business model is arbitrage. An arbitrage between exchanges in different countries. The thing is, a price of a crypto coin is different in different countries. Take US and India for example. The price of a Bitcoin is $32,201 currently, in Binance USA. Whereas the price of a bitcoin in a crypto exchange like CoinDCX or any other, in India, is $33,448. A price difference of $1,247. So, an arbitrage opportunity right there. One may argue why a normal person can’t just buy from a US exchange and sell it in India, sitting at his home in India. This is because, you can’t create an account in the US exchange if you are from India. Can’t we carry out this model if I have a friend in the US? Then, you can. I have, you can too. But there are certain problems to it as well which you will get to know when you do it. But as a company, it becomes easier. We are taking USDT for our business model here since it is a stable coin(its price does not vary much). We know USDT is under scrutiny, but that’s not a worry since there are many more stable coins like USDC, USD coin etc available and we can use them. But, for now, let’s take USDT. You should know that there are mainly two ways of transferring USDT – ERC-20 method and TRC-20 method. ERC charges a flat 40 USDT fee but TRC uses a flat 1 USDT fee. Hence, we use TRC method

  1. Transaction Business Model: Suppose, Nancy wants to send $2000 to Ramesh in India. Our business model would facilitate her to send $2000 without any fees. She sends $2000, Ramesh receives $2000. Let’s assume the Selling Price in the Indian exchange is hovering around $1.10 and according to our contract with Rapyd, it charges a 2% fee per transaction. Nancy sends $2000. Company KetoPay collects it with the help of Rapyd Collect API . Then, it buys 2000 USDT from a US exchange through the $2000 received from Nancy, sends it to an Indian Exchange through TRC-20 method (ignoring 1 USDT fee for ease of calculations) , sells it at $1.10, and gets $2,200 back, making a profit of $200. Then, KetoPay disburses $2000 to Ramesh with the help of Rapyd Disburse API. We can’t ignore Rapyd fees of 2% per transaction. For two transactions, collecting and disbursing payment, 4% of the $2000 will be charged, which amounts to $80. So, our net profit amounts to $120, with a profit percentage of good 6%, better than transaction fees of PayPal. Voila! No transaction fees for the customer, and a profit for the company as well. See complete explainer video for a better understanding Video Explanation

  2. Wallet Business Model: Suppose, Nancy deposits $100 in her wallet. The company pays her an interest of 5% for a month. So, Nancy would be receiving $105 after a month. This business model will help company’s profit surge. Let’s assume the selling price of USDT in the Indian Exchange to be $1.07 this time, since the price varies from $1.05 - $1.13 generally and also assume 2% Rapyd fees per transaction. Nancy deposits $100. Company collects it. Company actually gets $98 due to 2% Rapyd transaction fee. Buys 98 USDT from the US exchange. Sends it to India through TRC-20 method. First Cycle: Sells 97 USDT received for a price of $1.07 each in the Indian Exchange. Gets $103 back. The company branch in India sends this $103 back to the US branch, which takes 3 days, for some intercompany fee. We will be calculating this intercompany transfer fee a little later. Second cycle: Buys 103 USDT from the ($103 received earlier) from the US exchange. Sends to India (ignoring 1 USDT fee for ease of calculation). Sells it for $1.07 each. Receives $110 back. The company branch in India sends this $110 back to the US branch, which takes 3 days. Third cycle Repeating the same process, buys 110 USDT (from the $110 received earlier) from the US exchange. Sends it to India. Sells it for $1.07. Gets $117 back. The company branch in India sends this $117 back to the US branch, which again takes 3 days. Assuming an intercompany transfer takes 3 days from India to US, we can do this for 9 times in a month of 30 days(30/3 = 9 ). So, there would be 9 cycles. Continuing it to 9 cycles, according to our calculations, the US branch would have $176 back on a $100 deposit at the end of the month, keeping the selling price fixed at $1.07 (obviously the selling price of USDT would vary within a month in the Indian exchange, but that would be miniscule to take into account since USDT is a stable crypto coin, whose price does not vary much.) So, on a $100 deposit by Nancy, company gets $176 back. Taking intercompany transfer fee over the month and the interest to pay Nancy back to be $4(reasonable assumption) and $5 respectively, the company takes a net profit of $67 or a profit percentage of 67%. So, in conclusion, For a $100 deposit for a month, company makes a profit of over 67%. So, you see this business model also works like a charm. Video Explanation

How we validated our business model in real life

One of our clients had an outstanding payment of $2500. We asked him to pay us in USDT crypto, because USDT is a stable crypto coin He bought $2500 worth USDT crypto in the US exchange, amounting to 2500 USDT. He then transferred this to my wallet in India with a minor constant fee of $1, using TRC-20 method. (You should know that there are mainly two ways of transferring USDT – ERC-20 method and TRC-20 method. ERC charges a flat 40 USDT fee but TRC uses a flat 1 USDT fee. Hence, we used TRC method) So, I got 2499 USDT into my Indian crypto USDT wallet. I sold this for $1.10 each in my Indian crypto exchange. I received $2750 (2500*1.10 - ignoring 1 USDT fee for ease of calculations) in return- a mammoth $250 in profit. Wherein I was just to receive $2500, I received a sweet $2750. Had we used PayPal, we would have received only $2375, due to PayPal’s $125 fee. So, in conclusion: Our client bought 2500 USDT for $1 each from the US exchange like Binance, sent it to me, and I sold this 2500 USDT for $1.10 each in one of my Indian exchange, profiting $250. So, you see this business model works like a charm. Also, we have used the app Uphold for carrying this out. Buying USDT at a $1 price in the app, transferred to Indian wallet, selling it there for a profit. We discontinued this because many people told that Uphold closes account without reason and is unreliable for long term. So, we closed our account there since we did not want to lose our money.

Challenges we ran into

Aforementioned, building the web app was much of a challenge since we had never worked with APIs before. Moreover, managing user data and all of its component resembling PayPal soaked us in various forms of headache and all-nighters. The APIs were like the skeleton of the body, and managing user data was like the managing the functioning of the body. Fetching, updating, deleting data, managing quality of code back and forth provided us a pool of knowledge of a software development process. We made extensive use of community support as well. The building of this web app was all a student could ask for as an overwhelming and exciting experience. Overall, it was quite a challenging but a wholesome experience. Ultimately, we made PayPal, but just better.

What we learned

A lot of things. Project managing skills were put to test. Communicating our ideas with our team also played an extensive role in building our deliberation skills. Handling API calls, resolving terrifying errors and managing a new set of challenges every time helped us in building qualities of software engineering. Most importantly, working with the help of documentation only (due to lack of surplus videos about Rapyd on YouTube) honed us with a skill of learning through the documentation. On a personal level, you could say we learned how to pull all-nighters.

What’s next for KetoPay

Completing Production level features:

  1. Email verification
  2. Password validation
  3. Improving Security
  4. Email receipts for customers to give them a record of their payments
  5. Using better and scalable frameworks.
  6. Improving UI/UX
  7. Better data management so that users can see their complete stat of payment records. We are eagerly waiting for judging to complete so that we can come back to this and build a production level webapp with the help of Rapyd community.

FAQ

** 1. I am just having trouble getting the math to work on my side. In your Transaction Business Model example you show a 10% premium of USDT between US and IN crypto exchanges. While I agree +3-4% is common and potentially achievable I am unable to find any consistent record which shows that size of spread at +10%. $2000 Fiat USD also does not convert directly to $2000 USDT, the exchange will typically make 0.5% on that first buy so you end up with 1990 USDT right out of the gate.**

  1. Firstly, the company would buy crypto with bank transfer. Many Crypto Exchanges offer that. So, $2000 would not reduce to $1990. Secondly, USDT price in the Indian Market has already reached a premium of 10% before quite a few times. Understandably, this won’t be the case every time. That’s we have taken 7% which I mentioned in the wallet example. But even then, we are going to make some profit. And sometimes even a loss. But this will be covered when the spread actually becomes 10%, which also happens. In the wallet deposit after disbursing the amount to customer, we still are making a profit of 67% (it may be 60 % or might be 55% as well ) but still the profit margin is so high that we can cope other losses.
  2. What procedure will you follow if someone has to send money from Australia to Spain? Is there any more stable coin which can help you sustain your company if transaction is carried out in between these two countries without taking any transaction fee? 2.Suppose, someone from Australia wants to send money to Spain. Let’s say AUD. This AUD will be first be converted to USD and the same procedure would be carried out. Even after we take the currency exchange rate fees, we would still make a profit. And if we include a 1% transaction fee ( for <$1000), we would make even more.

** Let me explain you. Suppose, you want to transfer 1000AUD from Australia to Spain. Then, 1000AUD is equivalent to 627 EURO. Let’s understand this in some steps:

1000 AUD will be converted and we, Ketopay will get those 1000 AUD in the form of USD. Hence, 1000AUD will give us 740.60 USD (as 1 AUD = 0.74 USD)

We will purchase USDT of worth 740.60 USD , lets keep it 740 USD for easy calculation. 740 USD will give us 740 USDT. We will transfer these USDT in European Market.

We will dump these USDT in European market. 1 USDT in European Market lies in the value of between 0.80 to 0.95 Euros. Let’s take the average value of 0.9 Euros for 1 USDT .

1 USDT = 0.9 EUR 740 USDT = 666 Euro

and we have to pay 627 euros to the beneficiary in Spain.

Hence, Balance = 39 Euros. But after deducting the Rapyd fee of 2% per transaction , which will be 25 Euros. Hence, Profit = 14 Euros

**

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