Hazza ICO – Building real economic value for Payment Market Participants
by William Stephens
In keeping with the straight forward approach and format of previous articles written and posted on this site, I will first lay out the basic premise and aim of the Cryptocurrency and what problem the company is attempting to solve. Later in the article we will cover their strategy and how they plan to go about to solve the concern and why their plan is the best approach.
Hazza is a proposed global unified payment network software program that seeks to reduce the complexity, the number of intermediaries, and variety of payment methods in an ever growing web of interconnected payment systems. The lack of universal acceptance, inefficiencies and closed proprietary technology are problems faced by participants in this industry. Moreover, new payment systems are designed, as pointed out by Hazza, to resolve one specific concern and therefore are somewhat one dimensional. The solution to the problem according to Hazza is to build a democratized, unified payment network that would accept all forms of payment whether this is a local payment, organic to a specific country or neighborhood within that particular country or a widely accepted method of payment. Hence, the use of the words “democratized and unified” payment network and to facilitate this, the company will use their proven Octo3’s technology onto blockchain.
The proposed platform is based upon Octo3’s existing Global Payment System, which is a scalable cloud-base Omni-channel proprietary technology. Here are a few of the features of the program:
- It is a certified BASE I
- BASE II capable processor, and features a fully functional ISO 8583 payment switch.
- It is fully compliant with over 130 transaction currencies and allows full transactional oversight, covering e-commerce, physical POS, mobile POS, MOTO, coupon and loyalty programs currently.
- The Global Payment System has robust functionalities and the highest level of security, maintaining a PCI-DSS Level 1 certification.
Hazza proposes to implement their plan in a three phase approach. First, they plan to transfer their proprietary IP of the Global Payment System to the Foundation, open access to the Global Payment System and migrate it to blockchain technology utilizing a 3 phase approach. The sale of the token will raise proceeds to support the Hazza network setup and the development of phases 1 and 2. The Foundation is a not-for-profit foundation that will democratize the ecosystem and promote financial inclusion. The Foundation would also oversee the open access to Hazza network as well.
What are the Concerns/Problems with the existing system?
- In 2016 approximately USD $23.4 trillion worth of transactions passed through the ecosystem
- Intermediaries captured $585 billion in fees and fees are projected to increase to $1.7 trillion by 2025
- Current payment systems are proprietary and centralized in management and operation
- Highly fragmented, inefficient, complex, and dominated by different incumbents across various channels
- Transaction process between consumers and merchants remains poorly understood
- Existing structure is too complex
- Interrelationships among participants leads to significant inefficiencies
- Resulting in major pain points for merchants and consumers
- Lack of universal acceptance
- Merchants have limited access to payment methods
- Inefficient Layers of Intermediaries
- Fragmented Technology Standards
- Complex Multi-channel implementation
- Global Unified Payments Network
- Decentralize Participation
- Eliminates Inefficiencies
- Drives Innovation and New Economics
- Enable Financial Inclusion
Key Benefits: Global Unified Payment Network
- Could create over 730 billion of positive economic value by 2025. Most of the savings are technology cost, transaction cost, and greater access
- Increase penetration of PMPs and APMs to other countries
- Localize APM could potentially pay for items in other foreign markets
- Reduce significantly in-house developers or license technology
- Acceptance of unlimited payment methods while reducing costs
- Downstream innovation opportunities created by Hazza Network
Key Benefits: Hazza Community:
- Creates new jobs
- Creates sub-economies around Hazza
- Accelerates new payment methods
- Drives collaboration and healthy competition
- Accelerates innovation in financial technology
- Creates new financial products/services
- Promotes financial inclusion/allows smaller players to grow
Founder and Chairman of Octo3 Limited
Mr. Samuel has 20 plus years of financial infrastructure, payment, clearing houses, regulatory, IT and management experience.
- Ex-President and CEO—Cityline, Founder and CEO—ASAP Transaction Processing Corporation Limited
- Fellow of Hong Kong Institute of Directors
- Member of the Institute for Electrical and Electronic Engineers (IEEE), International Computer Society, and Association for Computing Machinery (ACM)
- Board member, Sir David Trench Fund (HKSAR Government)
Chief Executive Officer (CEO) of Octo3 Limited
Mr. Lynch has 20 plus years of P&L management experience for global multinationals in payment and technology sectors.
- Expertise in international market entry and commercialization of new businesses (recently created and managed NTT Group’s new global payments service line)
- Former CEO of NTT Data Hong Kong’s global payment business, Senior VP at NTT Communications Asia and Senior Executive for Atos Origin and Schlumberger Japan
Founder and Chief Technology Officer (CTO) of Octo3 Limited
Mr. Wong has 20 plus years of industry experience in large-scale mission critical financial infrastructure and payments systems development and management.
- Comprehensive working knowledge of the banking regulatory framework applicable to financial technology
- Previously led the technical direction, development and operation of mass transaction systems and designs and implementation of mission-critical messaging solutions at International Messaging Associates for US government organizations and many large international corporations
Collectively the Foundations Founders possess more than 60 years of experience in the payment industry, and they are committed to the delivery of change, promoting financial inclusion, democratizing the payments market and creating a more efficient payments ecosystem.
Hazza envisions an open and decentralized financial transaction network, which will be governed by Decentralized Autonomous Organization (DAO). As you might recall the DAO is part of the not-for-profit foundation, the Foundation, mentioned earlier in the paper which will be governed by the Hazza network community. The DAO is a pivotal part of the Hazza network. Hazza token holders will participate in the governance of the Hazza network via the Hazza DAO. Governance is for the benefit of the broader community, with advocacy of transparency, operational efficiency and innovation. This sounds like a lot of hyperbole.
Traditional Governance System Input
The Foundation is to sit outside the Hazza network, providing important check and balance. The proposed Board of Directors and executive management team will provide important systemic oversight of the network and it will undertake other functions to help facilitate its success.
The Board of Directors will be comprised of 3 Founding Directors and 4 Independent Directors which will be elected by the Foundation members. Network participants will not generally be members of the Foundation but they may provide input to the independent directors at some undetermined future date. The Board of Directors will primarily be tasked with making key decisions of the Foundation, reviewing strategic and material decisions, form board committees and delegate authority to those committees to carryout specified functions, such as remuneration committee, a nomination committee, and an audit committee. Additionally, Foundation will be responsible for overseeing the sale of Tokens, promoting the Hazza network, providing data management support and infrastructure.
The Foundation expects to introduce two revenue streams which will maintain its sustainability and ensure the goals of the Foundation are achieved. The whitepaper failed to mention what the above two revenue streams would be. I assume one of them to be the sale of the token but after a closer examination I believe the two revenue streams they are referring to are:
- Access fees—Participants are required to redeem Hazza Tokens in order to access the Hazza network. Access fees are tiered based on the type of participants (e.g. PMPs, PSP) and access to additional value added services (VAS).
- Certification fees—the Foundation will provide training and conduct assessments on the capability and competency of coaches and system integrators, and issue certifications to qualified network integrators.
- Advisory and maintenance service fees—although, the network will be an open API, some participants may need assistance in accessing the network. These participants will be charged a fee for assisting them with API integration concern.
- Installation and configurations services fees—The Foundation may provide training and certification for certain qualified individuals and institutions that provide coaching and integration services. This would be a fee based program.
Hazza Technology—the Company intends to make the network available to anyone around the world via a set of Open APIs, local payment methods can be readily added to the network and merchants can easily access all available payment methods via the Hazza network. The Open API enables system integration firms, device manufacturers, POS providers to add global payment methods into their local acceptance technologies. A blockchain-based Registrar Service would be used to secure and authenticate and authorize the registration of Service Providers and Merchants Participants to facilitate business engagement between participants.
The Foundation will adopt a progressive and phased development approach to move its industry proven financial transaction processing network onto a blockchain-based platform, as the technology matures. The open nature of the network could assist it to become ready for real world mass deployment.
Disclaimer: I am not advocating this Cryptocurrency in any way, nor can I offer financial advice as I have no professional qualifications; this is simply a whitepaper summary whereby I breakdown the core concepts and aims of the currency so that investors are more easily able to make their own decisions. Facts and figures taken from the white paper have not been independently verified. Any questions regarding further details should be addressed towards the Hazza team themselves.