Local economies cannot underestimate the value that small businesses bring to their markets. In the logistics space, whether it is building new highways, transporting produce or facilitating the transportation of waste and recycling, the trucking sector is critical to supporting national infrastructure — and it’s often some of the smallest trucking businesses participating in that effort.
Yet often, in the markets that are in greatest need of strengthening local infrastructure, the individuals and businesses providing trucking services to build it are underbanked. The result, according to TruckPay CEO and President Barry Honig, is that contractors are paying these small trucking companies in cash, which creates plenty of headaches, from security risks to financial management pains.
TruckPay, which helps to digitize the workflows of job ticketing and B2B payments between contractors and their trucking subcontractors, has expanded upon recent efforts to support multiple currencies by introducing the ability to facilitate cryptocurrency B2B transactions on its platform. Speaking with PYMNTS, Honig, along with the firm’s CTO Benjamin Honig, described how crypto can be a valuable asset for underbanked trucking companies in need of digital solutions to accept payment and thrive in their local economies.
The Digital Asset Value Proposition
TruckPay facilitates electronic payments on its platform through processors like Stripe and Plaid. Digitizing transactions in the trucking sector is key to bringing efficiencies to the market, particularly in areas in which businesses are under-banked like Latin America, Africa, and yes, even the U.S.
But as the company is expanding its international footprint, Barry noted that the company has recognized that some trucking operators are looking for alternatives to transact beyond their local fiat currencies, even if it is digital.
“Crypto provides the ability for people to connect and do commerce with each other in places where fiat is unstable,” he explained, adding that support for digital currencies is “a next step in the evolution” of digitizing workflows like work ticket transactions, which are historically done on paper, as well as migrating B2B transactions away from cash and paper checks.
In addition to mitigating against the risk of fiat volatility, crypto is well positioned to support populations in which mobile phone penetration is particularly high, added Benjamin, who said TruckPay had recently conducted a pilot test of its solution in Tanzania.
“Africa, for example, is one of the top-five booming economies of the world right now,” he noted. “But few people are banked, and the only way people are able to do payments is through smartphones. You see digital payments via text message, so crypto is a no-brainer for places like that.”
The company is still exploring the value of facilitating crypto transactions, which can occur by integrating a third-party solution like Bitpay, hosting its own software to create crypto wallets on the recipient’s behalf, or allowing end-users to generate their own wallet with private keys — though, Benjamin noted, the latter is a more advanced process and less likely to be the best fit.
Thriving Through Digitization
Around the world, the jury is still out on cryptocurrency’s future, particularly in the B2B payments world. But recent traction of digital assets through Central Bank Digital Currency initiatives, as well as Tesla’s $1.5 billion bitcoin buy, are accelerating the conversation about cryptocurrency — not just in the area of B2B payments, but in terms of how the technology will change the ways corporates manage cash and liquidity in the digital economy.
Barry said he is confident in the ability of cryptocurrency to gain traction as a commonplace currency, particularly in emerging markets with unstable fiat currencies. As a result, he said, enabling small trucking businesses to do business in crypto won’t simply address the pain of being underbanked. Rather, it can actually add value to their operations.
Benjamin pointed to Circle’s USDC stablecoin, for instance, which can allow coin holders to gain as much as 8.5 percent interest, “as opposed to holding money in a bank, where you’re getting maybe .1 percent, if you’re lucky,” he said.
And as markets broaden their support for digital asset transactions, Barry noted that these small businesses will also be able to have a more agile, digital way of transacting within their own supply chains — and their own lives. The cryptocurrencies they accept from their clients can then be used to procure new materials, pay for truck repairs, or simply allow truckers to buy a cup of coffee.
The global markets are still quite a bit away from cryptocurrency ubiquity, and each jurisdiction is on its own timeline towards adoption and regulatory maturity. Yet as interest in digital assets grows, the opportunities for the technology to streamline B2B transactions in the trucking and logistics arena, and even add value to those underbanked operators in ways traditional fiat cannot, will similarly expand.
“It’s really important for one to do things that can help enable people at the smaller end of the economy, to help them fully participate — especially in an area like logistics and helping build infrastructure,” said Barry. “Not only are you doing good business, but you’re also doing good.”