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What is Kona Finance
Learn how Kona Finance will help you get access to a multi trillion dollar industry, traditionally controlled by incumbent banks.
As a consumer, you probably give birth to receivables every day. They are born as soon as you swipe your credit card or enter those magical numbers into any website. At that glorious moment, a chain of events unfold behind the scenes to give birth to one of capitalism's most fortunate son. This ever recurring event repeats itself millions of times per day and differs somewhat depending on newborn's nationality.
Old Credit Card Arrangement
Brazil is quite an interesting market, due to its recent legislation, which separates these newborn receivables from their original guardians (acquirers), and delivers them to a legal guardian (registers). I know, this seems cruel, but it also presents an opportunity, bear with me. This seemingly cruel ritual was implemented to increase competition and segregate responsibilities. You see, the acquirers had an almost vertical monopoly on credit card processing as they formerly held full control over these newborns. Credit in Brazil works in weird ways... First of all, the merchant is the one actually offering the credit, as they only get paid 30 long days after the transaction took place. That's almost certainly way after you, valued customer, have paid your bill. A second interesting curiosity is that the most widespread form of credit is buy-now-pay-later (up to 12 monthly installments), which is again financed by the merchant. Both of these incredible facts (in the USA, capital from a sale is received in no more than 3 days; BNPL is an add-on paid in large part by the consumer) are combined with historically high interest rates to create what was one of the most profitable businesses in Brazilian history, as acquirers would charge a hefty fee to anticipate these installments.
Current Credit Card Arrangement
So what happens after these new born receivables are traumatically separated from the acquirer? Well, they are kept safe under one of the registry companies (Brazil currently have 3) and are initially registered to the merchant who processed that transaction. The merchant is now free to choose with whom to anticipate the payment. A provider is chosen, ownership is transferred, and the merchant receives cash up front. All done electronically. Kona enables you to be part of this magical process through DeFi!
Short answer is no. Receivable financing has global reach, although each individual market has its own nuances. Brazil is just screaming "finance me!" to the world!
In the USA, e-commerce platforms can withhold payment for up to 30 days. Business invoices usually have a grace period after a sale is fulfilled, presenting another billion dollar market.
In addition, it is important to note that Kona is not limited to the credit card market. Our protocol can be used to finance any type of receivable that can be moved electronically.