How to enhance the retail business with SCaaS
Together with Quantoz and BDO, Bank Frick has developed its own StableCoin-as-a-Service (SCaaS) solution. With SCaaS, companies that process large amounts of payments on a daily basis receive a closed payment ecosystem based on tokens and become issuers of their own stablecoin. The participants of such an ecosystem benefit from low fees and transaction costs as well as an intuitive user interface. SCaaS also offers attractive customer loyalty programs for merchants.
Retailers, e.g. in fashion, process large volumes of payments on a daily basis and operate in an industry with strong competition which has an additional impact on margins. At the same time, the B2C segment aims to retain customers as closely and as long as possible. StableCoin-as-a-Service (SCaaS) – a joint offering of Bank Frick, Quantoz and BDO – not only meets these requirements, but also makes it easier for companies to do business.
For this reason, we developed a hypothetical use case for a generic Swiss fashion retailer, who identifies the benefits of having its own stablecoin and wants to integrate it into its daily business.
The benefits of SCaaS
In this scenario, the company plans to implement a new infrastructure for its loyalty program and recognizes that SCaaS offers a cost-effective solution that increases efficiency and functionality. The company, which has sites in several European countries, expects this move to reduce the cost, complexity and risks of day-to-day operations. By integrating blockchain technology, the transactions become immutable, easy for the merchant to track and offer an efficient solution compared to traditional posting methods. The volatility risk of traditional cryptocurrencies is eliminated, as the stablecoin is linked 1:1 to a classic fiat currency (CHF, USD, EUR, etc.) – the choice of the fiat currency is up to the company. In addition, the underlying blockchain infrastructure reduces transaction costs to a minimum with an equivalent of 0.000004 Euro per transaction. By comparison, traditional transactions can cost traders up to 10 Euros.
Plug & play integration
In the past, fashion retailers have had contact with digitalization, but not with the underlying blockchain technology. For this reason, Bank Frick and Quantoz would support the company in the area of regulatory affairs as well as the technological integration into its existing systems. In the exchange with Bank Frick and Quantoz, it would quickly become clear to the company that no previous technical knowledge is necessary and that Quantoz’ plug & play system allows a quick and easy integration into any existing system.
SCaaS is also a self-issuance product and regulatory compliant for limited networks. This means that the fashion retailer can issue its own stablecoin and does not require an e-money license, as is required for issuing a conventional stablecoin. The issuer makes use of a regulatory exemption that allows end customers to purchase goods or services at the issuer’s premises. This enables the fashion retailer to implement the newly targeted loyalty program using the SCaaS solution, which is integrally linked to the existing infrastructure. In addition, all fiat and token transactions are fully traceable and allow smooth accounting while protecting the privacy of end users. By means of an API call by an external auditor, the total amount of loyalty points in a SCaaS system can be easily and quickly verified – making the work of auditors easier.
Easier and better customer retention
With SCaaS, the fashion retailer could also implement a loyalty program that stands out from the competition. The tokenization of loyalty points makes it easy to reconcile and book loyalty stocks – based on blockchain technology, security and unchangeability of loyalty stocks are the top priorities. The company could then individually define the rules of the game for its loyalty point system in order to meet the needs of its various customer segments – personalization is no longer a problem. This leads not only to a better customer experience, but also to greater cost efficiency. At the same time, SCaaS provides the prerequisites for an enterprise-wide program. By linking the various locations with a cross-border stablecoin, the loyalty point system can be controlled and managed centrally and synergy effects can be exploited – based on traceability and simple evaluation of payment flows, among other things. This is complemented by deeper insights into the behavior of the end customers. From then on, they could collect tokenized loyalty points with their purchases and exchange them conveniently at any location without the company being exposed to increased coordination efforts. Bank Frick and Quantoz would support the company at every stage. This offering is part of a one-stop-shop approach that allows the technology to be customized to the needs of the company. The technical implementation of the SCaaS solution into the existing systems is therefore fast, uncomplicated and requires no prior knowledge on the part of the customer. The proven technology provided by Quantoz gives the company full control over its transactions and makes loyalty points easily traceable and fraud-proof. Via the SCaaS system the issuer – in this case the fashion retailer – gets a simple and intuitive overview of the number and movement of the tokens in circulation within the ecosystem. In addition, the SCaaS system enables more transparent monitoring and tracking of transactions, giving the company deeper insight into the behavior of its customers.
Bank Frick in the back
The issued stablecoins are always covered 1:1 with a classic fiat currency. The deposit account is located at Bank Frick and is in the name of the customer. Since the retailer in our scenario is active in the European Economic Area as well as in Switzerland and Norway, it could decide to issue three stablecoins, each of which is fully covered with EUR, CHF and NOK. Depending on the economic area, the loyalty points are thus deposited with the corresponding currency. The company could also opt for the option of having its fiat deposits audited quarterly by an independent auditing company. Further applications After successful implementation, the retailer could decide to benefit from the advantages of a stablecoin in other areas as well. In the future, for example, the company wants to take advantage of the very low transaction costs and issue a stablecoin for its own use, which could be used for liquidity management between the different locations.