Executive Conversations by The Paypers with KAST | Episode 3: Building the Rails for Everyday Stablecoin Spending

In this episode of Executive Conversations by The Paypers, host Dwayne Gefferie sits with Raagulan Pathy, founder of KAST, about what it takes to turn stablecoins into something people actually spend, not just trade. 

Stablecoins moved over 30 trillion dollars last year, rivaling Visa on raw volume, yet everyday payments made up only a small fraction of that. Raagulan unpacks what's standing in the way of stablecoins becoming genuinely everyday money, what KAST does differently from others in the market, and where the value behind its yield and cashback offers comes from. 

About Executive Conversations by The Paypers 

Executive Conversations by The Paypers is a podcast series that brings together senior industry executives and leading voices in global payments and fintech for high-level discussions on the trends, tensions, and opportunities shaping the industry today. 

Each episode is a genuine on-the-record exchange on relevant conversations with the people driving change in payments, fintech, and more. Hosted by Dwayne Gefferie, the series gives listeners direct access to the thinking of the executives and experts who are defining where the industry is headed next. 

Transcript

SPEAKER_02 0:00

Welcome to Executive Conversations by the Papers. I'm Dwayne Jeffrey. This episode I'm joined by Ragulao Pati, the CEO of Cast. We'll explore whether people are really using stable coins in their everyday life. And we'll explore how Cast is building the reels that will actually make that possible. Thank you very much for joining us. Before Cast, you were the Singapore CEO at Circle. And one of the biggest names is stable coins, of course. What did you see from the inside that convinced you to leave and build something of your own?

SPEAKER_01 0:33

Yeah, so I set up a Rand Circle business for Asia for two and a half years, from 22 to 24. What convinced me to leave was that for the history of stable coins before that, when we eight to 10 years, stablecoins are always linked to crypto trading. Crypto goes up, stable coins go up, crypto goes down, stable coins go down. But what happened was at some point I could see that people would use this for movement of money, payments, uh to hold uh dollars, etc. And so I thought, okay, there's an opportunity now to build something bigger that is not related to crypto trading uh with the use of stable coins. A global neobank was, you know, what I my thesis was. And that's why I set out to build costs.

SPEAKER_02 1:17

Absolutely. Yeah, and especially that that volume that you see now in the market is where where I think I've seen these in big numbers. There's one being as big as $50 trillion being processed and a lot of that being traded. How do you see that growth now happening, uh, especially with the spending? Where is that actually being spent? Is that actually in retail stores?

SPEAKER_01 1:38

Yeah, so the actual spending of stable coins directly as stable coins is not so high because the acceptance is not there, frankly. But there is a lot of people who um source their money in stable phones. Either they get paid in stable phones, or maybe they're converting their local currency into stable coins so they could use it overseas. Maybe they receive stable coins for business reasons as well, and then they need to go and spend it. And the most common way to do that is to load it onto a platform um and then uh use a Visa card or MasterCard typically to be able to spend it. And that's the first thing that we enable was doing that. We obviously do a bunch of other stuff after that now, but that's the best way to sort of use stable coins. Um, but the people who are receiving stable coins for those reasons that I mentioned, that's increasing super fast all the time. Fantastic.

SPEAKER_02 2:25

So maybe let's dive a little bit deeper into that, right? Cast that's your company. Um, what is it that you do and what's the problem that you actually solve?

SPEAKER_01 2:34

Yeah, absolutely. So um cast is a global neobank. Um we service people in over 150 countries. And when I say neobank, we hold the we do the simple stuff such as like um deposits. Uh, you can hold, you can send money in in cash, or you can send money in stablecoins or crypto. Um, and then we just show you dollars or euros or other currencies. Um, you can also save it, you can spend it via a card, you can send money globally via our payments um solution, whether you send it via Swift, you can send it by local payment rails and QR payments in certain countries as well. Um and then you can also do wealth and soon you'll get credit as well. So it's everything that like uh you would expect from a neo bank. Um, but the difference is that because we hold stable coins in the middle, as opposed to cash, we're a bit closer to a wallet, and we can serve people in 150 plus countries. Most of the neo banks, the the Revolutes Wise and others, they typically serve Europe plus maybe about 10 countries. Um, but obviously the world is much bigger than that. And the need for a banking-like solution, a fintech solution is very, very big globally. Absolutely.

SPEAKER_02 3:43

So I think, of course, when people talk about crypto when they're talking about stable coins, they might imagine a trader, right? Like going in and out of those trades, trading to actually gain some uh gain some upside whenever they're they're trading that crypto. Or I think the cash user is probably a different type of user. Like, yeah, what is like a typical day for a cash user and what are they using, uh what are they using your product for to go to move money uh across the world?

SPEAKER_01 4:10

Yeah, so I think that up until 23, the majority of users would be crypto traders, to be honest with you. But today you're seeing stable coins used as the base layer for people doing tokenized stocks on the trading side. You're also seeing, like I said, people getting paid in stable coins, people moving money through stable coins because it's more efficient than banking rails. And so now probably more than half of our users are not really using for crypto. They just prefer stable coins as a way to move money more efficiently. Um, in terms of what we see them spending in, honestly, it's pretty similar to what you'd see in Amex or higher visa. Uh, they use it a lot for travel, for hotels, for flights, for retail, uh, restaurants, a lot of the normal stuff that you see people use it from for not that different. Absolutely.

SPEAKER_02 4:53

So that user, are they oftentimes much more of a crypto native, or are they just living in countries, for instance, where maybe their local currency is a little bit too volatile for their liking?

SPEAKER_01 5:06

Yeah, I think this is what often gets confused because there's people who are crypto native, and as soon as you think crypto native, you think about DGAN crypto or coin traders, you know, as what the public perceives. Um, but the majority of people who are in crypto now are more stable coin native, as and they're using stable coins, um, you know, coming in are stable coins with their local currency or other currencies because it's more efficient. They may not be like a crypto trader, but they're using crypto rails to be able to move money more efficiently. So we see our users being more stablecoin native, and some portion of them are crypto native, yes, they do trade, etc. But not all of them. A lot of them are just more stable coin native because it's a better way to move money.

SPEAKER_02 5:47

Absolutely. I think that's a great distinguish, right? Like you have the crypto native, now you have the stable native really that that progression from having users adapt to a new technology, and now they're still an early adopter, of course, of the technology, but it's funny at the end of the day, of course. Yeah. So I want to talk a little bit more about the the size of the opportunity. Like stable coins moved more than $30 trillion last year, rivaling or even beating visa or raw volume. Yeah, real everyday payments were only a few hundred billion of that. When you look at that gap, is it the proof that the payments era has barely begun or sign that getting people to actually spend stable coins is harder than believers uh actually can admit?

SPEAKER_01 6:30

Yeah, I think for a long time people were quoting that they were comparing the total volume of stable coin movement with Visa MasterCard, which is like comparing the total m you know movement of bank transfers with Visa Mastercard. So it's sort of like apples and oranges, right? Um, but you know, the amount that's being used for consumer and business payments is in that few hundred billion. I'd have it's questions of what it is. It's 200 billion, 300 billion, 500 billion. But but it's enough, right? And it's probably somewhere in the order of 3% or so of Visa and MasterCard today, right? But the thing is, is that it's growing very, very fast. It's probably growing 50% or maybe 100% year on year. So even though it's small now, you don't you only have to take a 3% and double it for a few years and something it's a very large chunk compared to visor mascot. So I think we've now at a position where people can see this as an alternative and it's going to grow very fast. And I don't think it's gonna overtake Vision Mascara within the next five years. But if you look at a 10-year mark, it could be, you know, comparable or you know, maybe if overtake it. And I think, you know, it's now on the path to becoming an alternative um payment route.

SPEAKER_02 7:44

But used for consumer payments and business payments. Absolutely. Like I think just a couple of months ago, every couple of years ago, everybody was talking about one versus the other, but now it seems more like they're converging on both sides, right? Where your users are actually spending probably over a real use of MasterCard or Visa.

SPEAKER_01 8:02

When when it comes to the uh we use uh visa now, but we're also working with MasterCard as well.

SPEAKER_02 8:07

So yeah, five foot budget crazy. Yeah, there's also another trend basically it becomes a lot more agnostic because you're trying to increase the acceptance on on one side. Um when it comes to utilizing stablecoin spending every single day, what stands in the way of that, right? Like how do we get more people to actually either save their funds into stable coins and then spend it? Um, and how do we get to that next level of increasing that spend?

SPEAKER_01 8:37

So I will address the first bit about saving more in stablecoins. I think you need more saving options so they can earn uh an interest on it, which obviously under debate right now as to whether you can have you bearing stable coins in the US. Um, also, I think there's not that much credit available against stable coins compared to credit against cash. So that's another piece that's interesting as well. Um, so that's one piece. I think in terms of spending it, the biggest issue is acceptance. Visa mascara, you know, nearly 150 million merchants, and I think less than half a million merchants would accept stable coins, right? So there's a huge gap in acceptance in terms of stable coins, which we need to be fixed as well.

SPEAKER_02 9:17

So do you believe we need to fix spending or the acceptance of stable coins in retail locations, or is the mechanism that you're probably using today, and maybe you can dive a little bit deeper into that, where at the moment of spending you're actually spending Sia, but it's uh a switch that's being made from your stablecoin wallet into that space.

SPEAKER_01 9:37

Yeah, I mean, if you look at a business today, it's hard to tell them, oh, you need to accept stable coins and then because then they're like, well, what do I do with the stable realms? I don't have many stable coins. Only one out of a hundred users right now may be having stable coins, right? That'll become 10 out of 100 in no time and then 50 out of 100 in no time. But right now, you can't expect a business to figure out what to do with stable coins. So I think they're just looking for solutions so that they can accept it and they still get cash just like if they accept it via a MasterCard. So I think there's an aspect of making it seamless for them to be able to accept anything and not worry about it. And then I think that you know you see some big movement after that.

SPEAKER_02 10:13

So that leans probably a lot more into that whole payments interoperability, right? Yes, as a merger, I just want to accept it, of course, have reasonable fees on that side. And as the consumer or user, I want to be able to spend wherever I am, and of course, also have as little fees as possible to that. Exactly. Absolutely. So I want to talk a little bit about uh what puts Cast apart from all of the elements, right? There are a lot of crypto cards or crypto need of cards, right? Crypto.com. Uh, we just saw the acquisition of Free uh Singapore. You have various visa crypto cards, even Marsigar funds their own crypto partner programs, whereas a lot of companies are trying to do stablecoin issued cars as well. For somebody who cannot see the difference, uh, what does CAS do maybe differently? Or, you know, what's the the hardest part of a competitor to actually copy that you have been able to execute on?

SPEAKER_01 11:04

Well, I mean, don't even worry about crypto cards. I think just look at cards in general, right? Like if you want to go and get a card, uh Visa card, MasterCard, there's hundreds of choices. So why do you choose one over the other, right? I mean, it still comes down to the full experience. Is the app beautiful? Did the card look beautiful? Is the service amazing? Can I uh do I trust this platform so that if something happens, you know, that they'll make sure that I get looked after? Are they running compliance properly and all these other bits? So financial services ultimately, um, it's a trust business, it's a software business. It requires, you know, you do deliver the best overall experience. The card is obviously, you know, one part of it, but it's not the whole thing. Like there's so many other things that constitute a neo bank and the whole experience. And we obviously having raised a lot of capital and we're building out everything, right? So you have a full neobanking experience. I think most of the others are just slapping a card onto a wallet and hoping that they all start using it without that full experience. And I think if you go and look at the numbers, like there is, I think, uh it maybe two or three companies, including us, that are taking up around, yeah, a maximum five companies are taking out 60, 70% of the business. And then there's probably another 200 or 300 that take out the rest. And I think over time, I think over the next 12 months, you'll see that let's call it five of us will have probably 80, 90% of the business in the crypto, in that crypto card space, if you want to pull it up. And then the rest of the 200 will have 10 to 20%, and they'll slowly die.

SPEAKER_02 12:37

Yeah, so so what we're seeing, and may maybe you can correct me on that, we're seeing a lot of platforms, companies just launching a crypto card, which is just an extension of whatever application or wallet that they have, versus the approach that you're taking, which is a full-on your bank experience for example. Global, global use.

SPEAKER_01 12:57

Yeah, exactly. It's basically a side project for the majority of people that it they're just like, oh well, attack this on, then it it'll work. And they're not worrying about the full end-to-end experience. Yeah. Which means that you're gonna have we've got, you know, 30, 40 people in our in our concierge team, we've got big compliance teams, we've got, you know, three, four hundred employees building all these uh payment rails, we're getting licenses, financial partnerships, there's a lot of work that goes into it, right? Most are not willing to undertake that that whole piece. They just want to undertake the I'll just put a card in my wallet and it'll work, you know. None frankly, none of the wallets are at pretty much none of the exchanges if Delma that'd be successful.

SPEAKER_02 13:38

Absolutely. So you just already touched on that sort of like the conserved service, but I want to dive a little bit deeper. You you get a lot of attention for the rewards program that you have, you advertise up to 7% yield and up to 3% in cash back. To a normal listener, of course, like whenever you go out and get a credit card or even a well, debit card mostly don't have, and so that's quite unique. So it almost sounds too good to be true. So I would love for you to take me a little bit more into sort of like plain terms. What is the value that what are you actually creating that allows you to be able to provide that type of yield or provide that type of cash back? Um, maybe in in the way that most of us can understand it.

SPEAKER_01 14:18

Yeah, I mean, most of the higher yield and higher cashback um is related to subscriptions. So we have a standard here which has a low, lower cash back uh pretty standard here. Um and then when you um do the thousand dollar a year, or if you really get bowler, do the ten thousand dollar a year, then you get higher cash back. But we essentially uh but basically you know, where there's higher yield, we actually put in the money to create the gap, right? So we don't do any it's still like treasury backed by market fund backed. So we're not doing a funky with it. We just basically appear from the gap with subscribers.

SPEAKER_02 14:52

So to clarify, so you put a deposit down, yeah, and then on that deposit you earn a yield on that deposit.

SPEAKER_01 15:00

Yeah, so we have um what's coming down put a reserve account. So you've got yeah, your account where you make, let's say you come out of a thousand dollars in your main account. Yeah, you put fifty thousand in your reserve account, and depending on your subscription tier, you'll get a certain amount of to abords interest rating, maybe why uh sort of four percent all the way up to eight percent, but that uh has a set cap like you do. The first fifty thousand up for two hundred thousand after that it drops back to the standard, right? Uh and then we basically are subsidizing that costs, right? Um, but it's part of that subscription tier of the benefits that come with the some of the other benefits that come with it is also cashback, but also airport lounges, all these other benefits that you see as well.

SPEAKER_02 15:39

That's and it's quite unique because normally you have credit card companies who are offering those types of solutions, but you're essentially not a credit card company.

SPEAKER_01 15:47

You're yeah, it's sort of very similar to what you would see in Amax or Bay, you know, different subscription teams. We're we're doing a similar thing, but in it within the space.

SPEAKER_02 15:56

That's a great one. So you've built a consumer business, right? Uh you have a consumer product that people really love, but now you're also moving into business statements and a payroll with CAS business. Uh, some founders would probably call that two different businesses. Um why is the focus why is that a focus rather than just a No, they're actually very related.

SPEAKER_01 16:19

And I'll tell you why is that we found that 25 to 30% of spend was for business reasons. And it was happening with what I would call like solopreneurs to SMEs up to 100 people. And we were seeing them they were paying for subscriptions at cloud and uh airlines, hotels, the things that you could kind of see. Okay, they use it for business retap, but maybe personally, and so that what that's what made us uh open, yeah, the business platform. Um, we also wanted to make sure we had good payments so that people had money and stuff, they could do it on business. Um, and what we find now is that uh we initially had yeah, three, four, five hundred people on the wait list.

SPEAKER_00 16:55

Now we've got I have to check it with Fiona Red. I think it's my any three thousand bits of West Car.

SPEAKER_01 17:02

Uh and so we just and because the demand we have already through consumers, they're like, yeah, I've got to miss this. I was just waiting for you to give me a business version, right? So we're just we're building for what we already see as demands or yeah. The customers are asking for it, the consumers are asking for it, he's like got businesses. So we're just delivering them what they want.

SPEAKER_02 17:20

Seems like a very data-driven approach, right? So I think oftentimes when it when a recent new car program's launch, it's a lot of hype, a lot of the latest trends, but it seems like you're really driven by the actual data, the actual spend that's happening within that. What what have you what have you done to put yourself in a position to be able to utilize the type of data and actually make decisions on that?

SPEAKER_01 17:42

Yeah, I mean, we can obviously see it. One of the advantages is that you know, we've got five billion dollars that uh annualized volume through our platform. And so we see a lot more scale. And so now we can see if for a lot more things. I mean, we're just turning two this year. Um, but before we wouldn't be sorry, two is in one that's time. Um, but we don't, you know, at the beginning we couldn't see that. Now with a bit more scale, we can see more things and we can see what customers want. And now we that's it's the perfect place to be because then we can feel what customers want.

SPEAKER_02 18:12

So I want to dive a little bit deeper into the the payroll aspect because I think that's extremely fascinating. We have so many different payrolling platforms happening, but um imagine I have a small company, I have a couple of people on a on a global or global scale working in different companies. Uh what is broken for them today and how does cash sort of like come in and change how I can actually run that pay?

SPEAKER_01 18:36

Yeah, I mean, I think the biggest issue um is that you have to have like a bank account in your country, um, and that the country may not even be where you set up your entity these days. Um so you know, often people may have a BBI or Cayman's entity, they may have a Singapore or Hong Kong entity or somewhere they live in another country, so they've got to get banking for that entity where their country is. And then they're paying people, you know, if your company we have 300 people, but we have sorry, 35 different countries, right? Some people want to get paid in stablecoins, some people want to get paid to their bank account. Uh and there's lots of variation. Some people want to be through an EOR setup in their country, um, which we do. Some people are straight contractors. So it's a big mix, right? There's no platform really set up for that new type company, and that's essentially what we built. Fantastic. Yeah.

SPEAKER_02 19:25

So I think you raised $80 million, right? And throws that on a Series A. Um, and within that, I believe you are trying to charge the B US, Latin market, and the Middle East. Those are all three very different markets. Yeah. Uh, how do you decide where to push hardest over the next couple of years?

SPEAKER_01 19:46

Well, we already see the demand in these markets, so we're just following where the demand is. Um, and so it's really just scaling out where we've already got users already. Uh, and that's essentially what we're doing.

SPEAKER_02 19:57

Yeah. And what is sort of like the the what is that data point that you're seeing? Is it is it that volatility in the market when it comes to currencies where people are looking for?

SPEAKER_01 20:06

No, I think I think it's just um these these three places in particular are very dollarized, and so uh that's the biggest they want to move dollars in a more efficient way. Um, but also we've got users in Europe, and I think uh euro stable coins come big as well.

SPEAKER_02 20:21

Do you see that in your future as well to try to utilize European stable coins and other Yeah, we're just introducing it now, and we've got euro at the ability to hold Euros as well.

SPEAKER_01 20:30

Uh so yeah, we're seeing that as well.

SPEAKER_02 20:32

You describe global compliance as a competitive edge rather than a cost. Um make that case, why does being licensed across so many different countries actually help you win rather than slow you down?

SPEAKER_01 20:44

Yeah, so we um uh at the beginning when you don't have many users and you can rely on your partner um licenses. Um, but the downside to it is that you obviously give up a budget margin to your partners, which means you have less economics to be able to share with your users through incentives and other means. But the second thing is it's mostly through reverse solicitation. In a lot of countries, you can't actively solicit. Holding licenses, you can go and market directly to users a lot more. You can also build your own infrastructure, which means that you are you have more of your own males and have better margins as well.

SPEAKER_02 21:19

Which licenses are you do you currently have?

SPEAKER_01 21:21

Um we've got eight or ten different licenses across the world, but through a process of acquisition, we hope to expand that footprint to 30, 40 different licenses, supposedly.

SPEAKER_02 21:31

So pretty much you'll be in a a couple of key countries, but then also within Europe you can passport a lot of that throughout Europe as well.

SPEAKER_01 21:38

Yeah, exactly. So we will expect to have full MECA uh very soon. Uh and yeah. Yeah, we'll we'll we'll be having all of EMIs, VLASPs, and UK as well. We're a bit uh uh in the UAE, Middle East, Kinesia, uh the US are you know, hopefully forty eight FTLs, you know, within a year. Um and then LATOP license.

SPEAKER_02 22:00

You're open a cast is not a bank. So if for the ones listening, if a stable coin you rely on slip in the dollar's value, we've seen that in the past before. Yeah. Or one of the partners ran into trouble. What happens to that person who has their funds sitting inside of a cast account in the market?

SPEAKER_01 22:18

Yeah. So what what we actually do is that we uh as people deposit USCT and others, we actually turn it into a uh into a uh we're now turning into USDK, which is our instep point, which is reserved through uh money market funds like Black with BlackRock and others as well, right? So and Treasury right, Treasury as well, right? So we that's the way that we make sure that it's secure rather than just fully relying on partners. But I would say now, like USDC in particular is very safe as well. Yeah. Okay, perfect.

SPEAKER_02 22:49

You're on a tremendous journey already. You've raised $80 million. Um, you're blowing growing globally, of course. Um, for your most of your users, Cash is probably already replacing their bank account. Or is it much more that it's the backup to their traditional uh bank account?

SPEAKER_01 23:06

So I would say that traditionally we'd been the backup. I'm I don't BS it. Um but now what we're seeing is that a couple of years in, as we have more and more um usability for the platform, you can do more than deposit stablecoins, spend a card. You got bank accounts, you can move money, you can do savings, wealth, et cetera. Now we're becoming the primary bank account for a lot of people, especially those people who are at business as well, because they have the business account and the main account, and then we become their mainstay. Fantastic.

SPEAKER_02 23:33

Yeah. So you believe the next billion people will actually bank differently. What do you understand about money and those people that most of the people in this industry are probably not seeing?

SPEAKER_01 23:43

Well, I don't believe that someone who is um sub-25 or sub-20 will come into a world where they'll be like, okay, I'm gonna go and get a job in my country and get paid in my local bank account from my local company. That would probably only be um maybe 50% or maybe it's more, maybe 60 or 70%, but a good percentage, whether it's 20%, 30% or 50%, will come in and work for a global startup um or global company. Um, and they will have different banking needs, you know. And they may not even like, you know, if you're here in the Netherlands, they may be like, I know plenty of Dutch people live in Bali and other places. They may just be like, okay, like I've got this job, but I don't need to live in the Netherlands. I might go and live in Bali, I might go and live in Dubai, I might move around to work remotely. So they just grow, they're just coming into a world of opportunities, of companies built in a different way. Uh, they live in different places. They're not the people from 20 years ago, if when I was uh, you know, around that age, where you go in and you get a job in one country and then you go one bank account, you know. So I think their banking needs are just different from day one, you know. And the businesses they work for are different, you know. And that's why the next that billion people will, even if it's not a billion people today, over the course of the next 10 years, there's gonna be a bunch of people who are just like, well, the current banks don't work for the life that I'm living, you know.

SPEAKER_02 25:07

Yeah, so to close it off, um, I always like to ask my guest um about the future. Sure. And not just, hey, the future's all bright, but what needs to change in the future for you to excel, for cash to excel, for basically the business that you're operating in to do a lot better. What would have to change? Would that be something on the regulatory side? Would it be that adoption towards stable coins? What would that be if uh on?

SPEAKER_01 25:35

Yeah, I think um the move on look when I started in stable coins, there was no stable coin legislation. Now there is, but I would still say it's rather imperfect. I think um the US making a big move, but let's see where the eventual legislation around genius and clarity lands. But essentially, um, I think that will help force a lot of other people to move and to integrate it. But you we need stable coins integrated in the financial system. We need banks to be able to accept it. They need to be able to um move money in and out of stable coins via the banks. So that's really the biggest thing that needs to happen because realistically, people are not going to come and live in a pure stablecoin world, but they're not gonna also be living in a pure fiat world. It's gonna be this hybrid for the next 10, 20 years. So removing that friction of allowing that hybrid life to live together, you know, um, that's essentially what needs to happen to unlock um stable coins, but also make just moving the money easier, right? It's not just about stable coins, it's also about people being able to live for the life that they actually live. Oh, sir.

SPEAKER_02 26:38

Well, thank you very much very much for joining us here at Executive Conversation. It was a pleasure be talking to you. Likewise. If you like this episode, hit like, follow, and subscribe for more.