Rupt: A Payment Network and Currency

Ken previously wrote a post about wanting to develop a recharge card powered currency platform. It was just an idea at the time, but now, he’s actually working on it. Find out how in the post.

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So I’ve been obsessed with the idea of using airtime as an alternative instrument of payment for a long time. It turns out that this is pretty much impossible if the telcos and the CBN do not support this idea — they don’t and won’t, so it ain’t happening.

I forgot about this whole airtime for payment thing, till a very good friend of mine Odion mentioned it in one of our meetings. At that time, we were working on an online “Betting as a Service” application and noticed how difficult it was to implement a payment system that would allow people make micro-payments from anywhere without having to use their debit/credit cards or go to a nearby bank.

What we wanted to achieve was a WordPress-like system where bookies click a couple of buttons and wahala! — they have a betting website. We wanted to provided everything from the software, payment processing, remittance of winnings and an agent network of ticket vendors. To do this, we needed to be in control of payment.

Going with Interswitch wouldn’t have been a bad choice if we weren’t heavily targeting the regular baba/guy on the street who knows little about online payments or may not have a bank account.

More so, we didn’t want to use Interswitch for the following reasons:

  1. It was and still expensive to setup
  2. Using one of their minions (the aggregators) will mean a super low margin for us and the bookies.
  3. We didn’t want agents to use PoS as this could increase the cost of becoming one.
  4. Some people may not have a debit card.

This was when Ody asked if there was a way to allow people buy bet tickets using airtime. I cannot exactly remember my/our response but it started a separate discussion between her and I on how to make it work — Airtime as a payment system hmm! hmm!!

I understood we cannot actually use airtime as a way to pay for services. I mean, one cannot go out and buy N1000 MTN card and pay to a merchant online — Even if they accept it, how would they tell if it’s valid? Punching in a lot of pins into a device? of course this won’t scale. How would they exchange for fiat currency? Questions for the gods…

We researched bitcoin and other cryptocurrencies and how they get their value. A bitcoin is pretty much a “record” on the bitcoin network that gets it’s value from it’s scarcity, cost of mining (electricity, hardware etc) and people’s trust in it.

So why can’t we have a digital currency/property that is backed by airtime — A currency whose intrinsic value is a mobile airtime and can be converted to airtime at the request of the owner. People buy this currency as they do bitcoin and exchange for goods and services. This study gave birth to the Rupt Network — A centralised payment network powered by a native currency named “rupt”.

Introduction

Rupt is a centralised digital currency and a payment network backed but not powered by mobile airtime. The Rupt Network is a collection of people and applications working together to create a new kind of financial system built solely to foster the development of innovative financial applications.

The Currency

To store and transfer value between people or applications, the network has it’s own native currency named Rupt or XR.

Unlike Bitcoin and other cryptocurrencies, rupts are not mined or pre-mined. They are created on request by market makers who fund the network.

The funds received by the network provides the initial/base value for every unit of the currency created. These funds are held in trust and will be used to procure mobile top-ups for anyone who owns a rupt and needs to convert it to airtime at any time.

We choose to back the currency with airtime (it could have been cocoa, gold, bitcoin etc) for 3 reasons:

  1. Airtime is still a valuable asset/resource to people in developing countries.
  2. We didn’t want to create millions of rupts that have no value. It makes sense to simply treat it as a commodity and sell it from inception.
  3. It would seem dodgy if we sold something that never existed and kept the proceeds.

Unlike regular currency, all rupts are not equal — What this means it that a unit of rupt has a base currency that may be different from the base currency of another unit of rupt.

For instance, If a market maker in Nigeria buys 1 rupt, then the base currency will be Naira. He could buy from Ghana and have the base currency be Cedi. Both are not equal because their value will vary.

So, the native currency is made local to particular country. One can say a rupt is a kind of tether currency.

Furthermore, a rupt is pretty much a record that can be destroyed when the worth of airtime backing it is requested. Upon request, the rupt is removed from the network and airtime is sent.

The Market Makers

Market markets are the backbone of the network. They provide the liquidity needed to make the whole system functional. Pretty much the entire system revolves around them.

They buy the currency from the network itself (at a fixed price) and sell to people via exchange services (more on services later). If someone needs rupts to make payment, they would have to exchange Naira for some rupts and vice versa.

Just like foreign exchange markets, market makers determine the final exchange cost and earn from every trade (buying or selling).

The Services

Services are applications that make use of the network APIs to build custom and unique solutions.

The network is an API server that handles creation, destruction, authorization, movement and conversion of rupts. Every other functionality will be provided by third-party services.

Even though the core has a wallet based architecture, there is still a need for a wallet management service to provide a front-end view and the various functionalities an end-user would interact with. There are other cool services people could develop such as a PayPal-like payment system, a MoneyGram kind of service etc.

The goal of the network is simply to create an alternate financial system that developers can leverage on to build powerful game changing applications. At a time when digital currencies are becoming the future of money (spearheaded by Bitcoin), there is no better time to do this than now.

Airtime Vendors

These are online mobile top-up businesses that will work closely with the network by providing an interface through which the system will purchase and transfer airtime. Each time a request for airtime is received, we will forward this request to the top-up vendor.

The Conclusion

We are really interested in seeing this through and are constantly pushing to meet our milestones. We are currently half way into developing the core itself and are actively seeking for people who believe in our goal and would like to be part of this.

This post first appeared on Ken’s blog.

8 Comments

  • Temi Temilolu says:

    Effing genius! Now this is what is called disruption!

  • Efeturi Money says:

    I’m very curious as to the choice of the name ‘Rupt’ for this.
    If anyone is like me, the initial things that come to mind when I hear ‘Rupt’ are rupture, interruption…two words I would not want anywhere “my money”. Might be just me.

    That said, M-PESA does something similar. They are worth a mention or some form of acknowlegement

  • ib says:

    I don’t really understand

    Let’s Assume

    1XR : N100 AIRTIME (: refers to backed by)

    MARKET MAKER PAYS N110

    SELLS N120

    YOU MAKE N10, THEY MAKE N10

    WHAT ABOUT THE BUYERS AND SELLERS OF SERVICES?

    BUYER PAYS 1XR(N120 at market maker price) FOR SERVICE X

    PROVIDER OF SERVICE X CAN ONLY RECEIVE AIRTIME(N100 worth) IN THIS CASE?

    This has the potential to create a race to the bottom exchange system rather than a currency from my assumptions (which I’m thinking are wrong). If my assumptions are correct, then the vendors who provide the top up will more or less come to own the business with minimal effort.

  • ib says:

    My emphasis wasn’t on whether it was an alternative method of buying airtime, it was on whether airtime was the only thing sellers like Konga could receive but I understand it now.

    I was not putting the dual buying (from Rupt and people who want real currency) part of the market maker’s function into consideration.

    So the example is more like:

    MARKET MAKER BUYS 1XR FROM RUPT AT N100, BACKED BY 100 AIRTIME

    I BUY 1XR FROM MARKET AT N110, MARKET MAKER MAKES 10, GETS BACK N100

    KONGA LISTS AN ITEM FOR 1XR,

    I BUY THIS ITEM, TRANSFERRING MY 1XR TO KONGA

    KONGA EXCHANGES 1XR FOR N100 FROM MARKET MAKER WHO NOW HAS 1XR ORIGINALLY BOUGHT + N10 PROFIT

    ON THE OTHER HAND, I COULD HAVE EXCHANGED MY 1XR FOR AIRTIME WHICH DESTROYS THE 1XR AND GIVES ME AIRTIME.

    Beautiful.

  • Nnamdi says:

    I’d love to be a part of this. Who can I contact?

  • AK says:

    Consider changing the name. I got the reference to disruption, but it’s a terrible name for a payment solution.

    That said, this has great potential. I hope you crack it. All the best.

  • james agada says:

    Interesting. Not sure how it will play out considering that the telcos can easily turn airtime to currency at some point. But looking at the bigger picture, it could provide liquidity for some cases.

  • Akintomiwa says:

    I have worked with this medium for over 8 years. Yes,Telcos can turn airtime to currency but there are restrictions and red tape from various institutions (CBN et al) that prohibit them from doing so.Even VAS companies are going through hell. I would love to be a part of this swell adventure. Kindly do let me know

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