Imagine you’re a company operating out of France, getting paid for a US-based contract in dollars. Your payment isn’t due in months. By the time you get paid, the exchange rate may well take a bite out of the money you’ll actually pocket. It’s a very common problem. Kantox, who launch their beta today, aims to fix through their peer to peer FX hedge transactions platform.
Why not put together companies with similar needs on different sides of the equation? Essentially, Kantox is a long-term FX B2B marketplace, wherein two companies can connect via Kantox and through a digitally signed contract agree to exchange their currencies at a fixed rate established at the time of the contract. The transaction is delayed to a specific date, but the exchange rate is fixed, taking the risk out of rate fluctuations for long-term payments.
It’s an innovative idea from two ex-Deloitte consultants, Philippe Gelis and Antonio Rami. The copmany has already been selected as a winner or runner up in numerous local Spanish startup competitions, including Seedrocket, OMEExpo Investor Day, among others. To date, between startup competition prizes, personal founder money and small seed investments, they’ve raised a total of 110.000 €.
The company aims for the SME segment, to replace hefty bank transactions, claiming that they can generate up to 60% in savings. Kantox charges companies an annual fee of 295 € (currently waived till the end of the year) and a .68% per transaction. So this would make most sense if you are a repeat customer. Apart from banks, Kantox is based on a model much like peer to peer currency exchange companies, such as Peertransfer, Transferwise and Midpoint. However, the key difference is that unlike the latter, Kantox allows for long-term hedge transactions at a fixed exchange rate, where as others don’t.
To avoid security and fraud barriers, Kantox runs a number of checks and balances. Not all companies are accepted. They filter companies viability by evaluating their history, size, revenues, payment and credit history. This eliminates 80% of potential fraud they say. Companies also receive two rating scores, the first coming from an external credit history provider and the second based on a client’s prior transactions within the platform. If a company breaks their side of the deal, not only are they dropped from the system, but Kantox refunds the other party both their funds and the commission for the transaction. More importantly however, the transactions are managed through a segregated account, meaning money is not exchanged directly between customers, but are first deposited into a a third account, managed by Kantox.