According to VISA reports, the adoption of cryptocurrencies in Mexico and Brazil is higher than in markets such as the United States or Europe. Some statistics say that at least 8 out of 10 people in Latin America know what cryptocurrencies are.
In this Q&A we talked with Eric Nuñez, co-founder and CEO of Zenkipay, to learn more about Zenki’s product, as well as Eric’s background as a successful entrepreneur and what he’s learned from his past startups.
1. Eric, tell us about your background. What did you do before starting Zenkipay?
I studied information technology, and after graduating, I joined Roberto Bargagli’s project, “correo web,” which aimed to provide a Spanish alternative to services like Hotmail. Following the sale of “correo web” to CIE, the owner of OCESA and Ticketmaster, I led the Ticketmaster Online platform in several countries. Later, with Roberto, we created online tandas, a form of collective crowdfunding. When we encountered payment-related challenges, we decided to create Openpay, where we collaborated with Cabify and eventually were acquired by BBVA.
Today, Openpay operates as BBVA’s global payment platform in various markets. During our 10-year journey, we expanded to multiple countries where we cater to diverse needs.
2. What did you do after Openpay and how did you come up with the idea of creating Zenkipay?
We’ve always been immersed in the payment and e-commerce world, and we’ve explored technologies like cryptocurrencies and blockchain. In the past year and a half, we’ve noticed a growth in the adoption of these technologies. A year and a half ago, we observed a significant interest and growth in the adoption of these technologies. During the Bitcoin Conference in Miami, we witnessed a noticeable shift: 30% of the attendees were no longer exclusively “nerds” like us, but rather people seeking investment opportunities. VCs were present, and even Serena Williams announced she was launching a crypto investment fund. At the expo, all types of products, ranging from luxury watches to yachts, custom cars, and space travel, were available for purchase with bitcoins.
We identified an opportunity in the midst of this landscape. Despite having cryptocurrencies in our investment portfolio, there were still many obstacles when we wanted to use them for payments. The friction became evident when exchanging cryptocurrencies for fiat currency on an exchange before making payments. This inspired us to create a payment platform in the web3 ecosystem with the goal of making cryptocurrency payments easier.
Zenkipay emerged in response to a gap we identified in the market: while there were numerous trading and financial products for cryptocurrency users, a solution to seamlessly integrate these with real-world transactions was lacking. Our platform connects merchants with cryptocurrency-based alternative payment methods.
Today, e-commerce stores have yet to acknowledge and tap into this parallel economy, which encompasses millions of people. In Mexico, for instance, there are approximately 8 million cryptocurrency users. Zenkipay is a tool that facilitates the connection between merchants and cryptocurrencies as an alternative payment method.
3. How does Zenkipay work?
Our core function is to link multiple wallets, enabling access to various cryptocurrencies and creating a payment button that integrates seamlessly into your e-commerce platform. This button, offered alongside traditional payment methods like credit cards or cash, allows users to easily pay with cryptocurrencies. This is where the magic of Zenkipay comes in.
We start by asking the user which cryptocurrency they want to use for the payment. After they choose, we generate a QR code compatible with their current wallet. At the same time, we provide the corresponding exchange rate between their cryptocurrency and the value of the purchase. For example, if you wish to purchase a pair of sneakers for $120, you may pay the equivalent of 0.00025 bitcoins at that time. The user accepts these conditions, clicks “continue” and then accesses the QR to scan it directly from your wallet or, if you are using your phone, we allow direct connection with your wallet to facilitate the transaction.
4. What happens on the merchant’s side?
After confirming the purchase with the merchant, we convert the cryptocurrencies into stable currencies to guarantee stability during the transaction. Then, at the time of trade liquidation, which may be the next day, we convert those stable coins into fiat currency and make a direct deposit into your bank account.
This process is especially beneficial for e-commerce businesses. It gives them access to a market they may not yet be reaching and, more importantly, it easily removes the frictions and barriers that normally come with the adoption of cryptocurrencies in commerce.
5. After Openpay, what were the lessons you learned when creating Zenkipay? What did you do differently this time?
We have learned a lot of things over time, particularly in areas such as agile development methodologies, product strategies, customer service, and market deployment, among others.
What we learned is being fully applied in our new project. In particular, we focus on adapting the product according to the changing needs of the market. Initially, we started with the premise of providing stable coins in a wallet to merchants. However, we soon realized that many merchants preferred not to deal with the particularities of cryptocurrencies, and preferred to receive the funds directly into their bank accounts, making their financial and tax calculations simpler. Based on this feedback, we have been transforming our product.
Our team has several years of experience working together, which allows us to communicate well and quickly develop and adapt to the needs of the market.
6. You have worked with your co-founders for more than 10 years on different projects, what are your recommendations for building a good relationship with co-founders?
The seed of entrepreneurship is ingrained in you, and if you have an entrepreneurial instinct, you will eventually put it into action. You don’t choose the country or the family you are born into, but you do choose the people you associate with. It is crucial to select partners who complement your skill set and keep in mind and are receptive to feedback. Trust is critical. Your partners need to be able to provide you with honest feedback.
When you have a challenging situation within the organization, when strategic changes are required, open and honest communication becomes an essential pillar. Trust is the foundation for receiving necessary and valuable feedback.
Second, it is crucial to define responsibilities and roles in the organization. For example, Roberto leads product generation and the identification of innovative trends. Heber plays a central role on the technology side and supervises development through his technical team. I manage growth and operations and focus on customer interaction.
7. There are several VC funds supporting you, what has been the key to the company’s success in receiving funding, even with the downturn in venture capital?
When we started Zenki, we were in the middle of a boom in the cryptocurrency world, a trend that experienced a slowdown but is regaining momentum. Important events are coming up and regulatory and market stability issues are being discussed, along with company reviews and regulatory compliance, among other topics. To protect merchants, we have implemented wallet transaction analytics on the blockchain, allowing us to identify risks and suspicious transactions, such as connections to Tornado Cash or other reported companies.
On the VC investor side, valuations have changed since 2019 and 2020. Now, VCs are more focused on results than on growth alone. Our expertise in presenting financial results has helped us win investor confidence. This trust goes beyond financial capital; it involves mentoring, connections, and advice. In our journey, choosing the right partner in a VC has been critical. Researching and understanding investors, making sure there is a match between our vision of the business and theirs, and generating synergies with their ecosystem have been crucial aspects.
Ultimately, our relationship with VCs goes beyond capital and focuses on mutual growth, alignment of goals, and creating joint opportunities with other companies in which they invest.
8. From what we see in the market, we are going to see more and more acquisitions in the region in the coming months, what do you think is important to take into account for founders who may be a part of an acquisition?
The most important thing is to always have everything well organized and in order. As an entrepreneur, you have to do many things at the same time, such as operations, sales, and hiring. From the beginning, establishing certain guidelines, and focusing on compliance and risk analysis is essential. It is crucial to effectively manage finances, accounting, taxes, expenses, and customer identification, and closely track revenues and acquisition costs. We learned this lesson from previous entrepreneurial experiences. Preparing in advance is fundamental, especially when facing due diligence processes in future acquisitions. Getting external support ensures proper organization and allows you to focus on attracting clients without distractions caused by disorganization.