For all the investment speculation and hype, cryptocurrency has so far struggled to find meaningful use cases. Now there’s some effort from Singapore to turn the general public into crypto adopters through blockchain payments.
Cosmose AI, a nine-year-old company that uses AI analytics to track in-store foot traffic and engage with shoppers online, is partnering with Near, one of the blockchain protocols competing with Ethereum. The pair are building a payment system that allows users to shop with crypto at low transaction fees, saving money for both buyers and sellers.
As part of the partnership, Near Foundation, the nonprofit arm of Near supporting the protocol’s ecosystem development, has made a strategic investment in Cosmose. The round, of which the amount is undisclosed, lifts the company’s valuation to $500 million, up from $100 million when it closed its $15 million Series A financing in 2020.
Cosmose’s suite of retail solutions includes the KaiKai app that lets customers discover retail stores in their physical vicinity and an online targeting platform, both of which are getting a blockchain makeover with Near’s help.
Miron Mironiuk, the company’s founder and CEO, didn’t intend to ride the crypto wave; rather, he was seeking a solution that would make online payments cheaper for consumers and vendors Cosmose served.
“I’m not sure if you know how expensive and slow it is to process online payments. It’s absolutely crazy,” Mironiuk told TechCrunch in an interview.
He gave the example of buying a $5 cup of coffee. Payments processing companies like Stripe and PayPal charge effectively over 10% for small transactions, so the seller ends up increasing prices, forcing the buyer to pay 6-10% more. In a year, the coffee drinker could easily be spending an extra $200 just because the transactions are handled by intermediaries like Stripe.
Pay with crypto
With its Near-powered blockchain payment system, KaiKai, where users can discover nearby products and pay via the app, claims to reduce the transaction costs of one’s annual coffee consumption to just $4, which is 50 times less than the Stripe or PayPal method, according to Mironiuk.
“Imagine how much you could save if all payments are moved to blockchain,” said the founder.
Not all blockchains are cheap to use. One of the biggest challenges facing crypto adoption is the exorbitant fees involved. Without a centralized settlement system, cryptocurrencies rely on a distributed network of validators to verify on-chain transactions. That process on Ethereum is notoriously expensive, so alternatives like Cardano, Pokadot and Near have emerged to make crypto cheaper and more scalable.
Cosmose’s shopping discovery app KaiKai settles payments in its native stablecoin Kai-Ching, which runs on Near’s network. The app creates a crypto wallet for users, who can top up Kai-Ching with fiat currencies. In the future, users might have the option to convert Kai-Ching back into fiat.
Cosmose keeps a treasury for Kai-Ching, which is pegged to U.S. dollars (1 Kai-Ching = 1 USD cent) and only tradable within the app to prevent value volatility.
KaiKai first launched the option to pay with crypto in Singapore last September, where the government is in the process of formulating a stablecoin regulation. Since then, Kai-Ching has processed over 1 million transactions in the form of payments, refunds and rewards.
Prices are automatically lowered when users opt to pay in Kai-Ching. Over half of Ka-Ching’s users are Gen Z, and they are “super comfortable” with crypto because they know “the coins are on-chain” and “they own it,” the founder observed.
The company declined to disclose how many crypto users it has accumulated, but one data point shines a light on its user behavior: One-third of the transactions are paid with Kai-Ching. Given the traction in Singapore, it won’t be surprising if Cosmose is taking Kai-Ching to other crypto-friendly jurisdictions in the future.
Own your data
Cosmose and Near are onto something that seems even more ambitious. One of the promises of blockchain-based applications is to return the control over personal data back to users rather than keeping it with Big Tech’s centralized servers.
Essentially, Near is helping Cosmose migrate user data onto its blockchain and building out a system where users can see how the firm is tracking them, including their location, when they open the app, the products they browse and how long they stay.
The goal is to store user data on their phones using edge computing and let people decide how they want to be tracked to receive more or less precise product recommendations and rewards.
“It’s not only a technical challenge. It’s also a user experience challenge of how to do it in a way that people actually can check it and get some insights and decide quickly,” the founder said.
Since its inception, Cosmose has served over 20 million stores and reached one billion phones worldwide, with China accounting for “hundreds of millions” of them. The company has a team of 80 staff across Warsaw, its engineering base, as well as Shanghai, Hong Kong, Singapore, Tokyo and Paris.