Rather than jump headlong into a crowded P2P market, the team at startup ATCE Holdings instead saw a need to address the high costs of B2B payments — and singled out the agricultural industry as a good place to start.
Four months after launching, ATCE has landed a key agriculture industry financial institution client in Credit Nexus to use its digital payments system for the various agricultural businesses it serves.
"We had no interest in going up against Venmo or other P2Ps within the banks, and P2P was so saturated in many ways," said Wade Murray, chief innovation officer at ATCE. "In B2B, certain industries are held hostage by 4.5% fees and, in agriculture, there are some areas in which they are being gouged."
For agriculture businesses, a lower-cost option would come into play for payments to workers and suppliers, or for needed products. It would also aid those who are producing legal cannabis and hemp to move money reliably to banks.
Charlotte, N.C.-based ATCE, or A Team Creating Everything, offers Etude Digital Core as its cloud-based banking platform as well as the EtudePay system, which initially focuses on real-time B2B payments but is designed to allow financial services organizations to operate real-time payments and process for mobile, point-of-sale, ATM, Internet of things and other transactions.
"The full rollout version of the multi-channel system will be later this year, but the first rollout is the B2B web-based platform system," Murray said. "Because we run a software-as-a-service business, we provide our platform to different businesses and modify it to their use as to how it will best work with that business."
Over time, the company plans to provide payments or core services for other verticals beyond B2B agricultural payments.
ATCE Holdings has no vision of becoming a core banking system right out of the gate. "Do we think EtudePay will replace a core apparatus? Absolutely not … but it is a modern payment rail built to run alongside other rails and maybe replace some old ones," Murray said. "Ultimately, it is to make the entire process of moving money through the correspondent bank network process system in different countries cheaper and faster."
That's a smart approach for ATCE as a B2B startup, said Erika Baumann, senior wholesale banking analyst for Aite Group.
"With banking being so visible and highly regulated, it is hard for a startup to come in and provide the bank's core system," Baumann said. "There is room for startups, but more like as partners to offer some services."
Those who buy into ATCE's new payment rail would actually "own" that rail, a proposition that eliminates "renting" one and would help deliver new revenue streams and, for starters, would cut agricultural transactions in a range of 35% to 55%, Murray said.
"Some clients might be running a 25- to 40-year-old core system, and it may not be able to adapt quickly to our payments rails," Murray added. "If that is the case, we would actually stand up our core apparatus parallel to their legacy system and just give it to them so they can see the value of our core."
All transactions through the EtudePay system are supported one-to-one by stable coins that sit in an escrow that ATCE owns. "This is not a crypto currency, it is just a virtual, digital currency that exists inside the bank, and it helps us move money far cheaper and more immediate," Murray said.
ATCE has a payments development team operating out of Chicago, and core system development in Madrid, Spain, while also having offices in the U.K. and Switzerland.
Chairman and Global CEO Szilard Szurdok was previously the vice president of financial services for Hewlett Packard, while co-founder and CEO of Americas Phil Walton has 34 years of experience in P&L management. Co-founder and chief architect John Slater has developed core processing systems for retail banks for fintech companies he founded.
ATCE is a member of the Banking Industry Architecture Network, an industry association creating standards for the next generation of software and related tech solutions.
"There is certainly an opportunity and market for being an overlay for banks and a connection to new rails," Aite's Baumann said. "There is much less risk for a bank in doing that, and ATCE sounds like a company that understands APIs and connectivity."
In that regard, the company can make the pitch of being more efficient and allow banks to trim a situation in which it carries multiple vendors for various products, Baumann added.
