Cross-Border Payments On A Gold-Plated Rail

Amid global concerns, ranging from China’s slowdown to oil’s slide to any number of currency devaluations past, and possibly future (China again), it’s little wonder that some consideration be given to gold, both as a unit of currency and as a hedge against geopolitical events.

BitGold, owned by GoldMoney, said earlier this month that it has linked to the Single Euro Payments Area (SEPA), through which the brokerage says it is able to enable payments across banks. And those payments come without what the firm says are the hassles and delays tied to foreign exchange rates or wire transfers.

GoldMoney said the online banking platform is available to those consumers transacting through the firm with accounts at banks linked with SEPA across 23 countries. The company is partnering in these countries with Trustly Group AB, which offers secure payments technology.

In an interview, Darrell MacMullin, chief executive officer at BitGold, told PYMNTS that the attraction to gold as a deposit, redemption and payment mechanism, especially across borders, comes down to the fact that “gold is money across borders, with purchasing power that has held up over time … and yet there is no modern payment mechanism where gold can be used by buyers and sellers anywhere in the world.”

MacMullin cautioned that BitGold’s technology and process should not be confused with bitcoin or virtual currency. “This is not cryptocurrency,” said the executive. “This is actual gold, and through the system we’ve put in place, you can send or receive the value of gold, instantly.” BitGold and its parent company said in their release that the movement into SEPA is underpinned by the Aurum ledger and exchange platform, which moves transactions, backed by vaulted gold, across currencies and the metal itself and across mobile devices. MacMullin said the mobile app can facilitate payments across Visa, MasterCard and debit platforms.

Noting that cross-border activity, with buying and selling conducted across different currencies, can have a transaction cost of as much as 5 percent upon settlement once all fees are tallied, MacMullin maintained that gold as a backing currency, with less volatility than might be seen in global currency markets and with universal value, “has cracked the code to make commerce easier” through a closed loop that has no minimum transaction size. There are also no wire fees and no real costs tied to paperwork, given the reconciliation and connection between BitGold and checking, savings and investment accounts across the European Union.

For businesses, said MacMullin, the benefits are numerous, chief among them the fact that wages can be paid (or workers can elect to be paid), in effect, in gold. That can help eliminate the impacts, for example, of sudden and drastic currency devaluations or other economic events, such as central bank decisions. For B2B payments, companies and their suppliers can make the same transactional decisions without having to worry about larger macrofactors. MacMullin also told PYMNTS that the push into SEPA has benefits by not even being tied to a cryptocurrency, such as bitcoin, where a hypothetical 30 percent swing in the currency’s value — putting aside the ledger and security features that make visibility better in the payments world — can have huge ramifications between the time a payment is sent and when it is settled. That’s especially valuable in labor-intensive industries, such as mining, and mobile will prove especially valuable moving into emerging markets and serving underbanked consumers in areas such as India and Asia over the longer term, said MacMullin.