Solution for Building a Stablecoin-Based Payment Platform

Background

Brief Overview of Stablecoins

A stablecoin is a type of cryptocurrency whose price remains relatively stable, typically pegged to fiat currencies (such as the US dollar or Australian dollar), gold, or other assets to reduce market volatility. Stablecoins are primarily used in scenarios such as cross-border payments, cryptocurrency trading, and DeFi (decentralised finance). Generally, they can be classified into the following categories:

1. Fiat-Collateralised (e.g. USDT, USDC):

Backed by cash or bonds held in bank reserves.

2. Crypto-Collateralised (e.g. DAI):

Maintained through over-collateralisation with crypto assets (e.g. ETH).

3. Algorithmic Stablecoins (e.g. the now-defunct UST):

Rely on algorithms to adjust supply without any collateral.

In Australia, cryptocurrency regulation is relatively open, and compliant stablecoin trading is permitted. The main platforms include:

1. Locally Regulated Stablecoin Platforms:

a. Digital Surge (AUD-Pegged Stablecoin): An Australian exchange supporting AUD-pegged stablecoin trading. Regulated by AUSTRAC (Australian Transaction Reports and Analysis Centre).

b. Stably (USD/AUD Stablecoins): Offers stablecoins pegged 1:1 to the US dollar (USDS) and Australian dollar (AUDS). Compliant with Australian financial regulations.

c. Novatti (AUDD—AUD-Pegged): In partnership with the Stellar blockchain, provides a compliant Australian dollar stablecoin (AUDD). Regulated by APRA (Australian Prudential Regulation Authority).

2. Use of International Stablecoins in Australia:

a. USDT (Tether) and USDC (Circle): Tradable on Australian exchanges such as Swyftx, CoinJar, and Independent Reserve.

b. DAI (Decentralised Stablecoin): Suitable for DeFi platforms like Aave and Compound, accessible within Australia.

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Transaction Scenarios

Overview

By leveraging blockchain transparency, smart-contract automation, and the cross-border liquidity of stablecoins, a stablecoin-based supply chain finance solution can significantly enhance the efficiency of traditional supply chain finance while reducing costs. This document focuses on two core payment scenarios as a foundation for building the payment platform.

1. Accounts Receivable Financing (Reverse Factoring):

Small and medium-sized suppliers in trade settlements often face long payment terms and tight cash flow. Traditional factoring requires bank credit lines and cumbersome paper-document reviews.

With stablecoins, a core enterprise can issue “on-chain accounts receivable certificates.” Suppliers pledge these certificates to a DeFi platform (e.g. Aave, Compound) via smart contracts and receive an immediate stablecoin loan.

2. Dynamic Discounting (Early Payment):

Suppliers must pay high discount fees to receive early payment for goods.

Using stablecoins, the buyer uploads trade data to the relevant platform, specifying payment terms and discount rates. Suppliers choose to discount part or all of their receivables; a smart contract calculates interest on a daily basis (formula:

Discounted Amount = Invoice Face Value * (1 - Annualised Rate * Remaining Days / 365)

) and pays out in USDC directly.

Scenario Breakdown

From a functionality standpoint, the above scenarios can be further subdivided into:

• Basic Functions:

• Identity verification (KYC/AML)

• Multi-level account hierarchy

• Virtual accounts (for rapid receipts, e.g. sub-merchant settlements on e-commerce platforms)

• Core Functions:

• Smart-contract-backed letters of credit (LC)

• Dynamic discounting with per-day interest accrual

• Exchange-rate locking and automatic conversion

• Split-payment (split-settlement) mechanisms

• Value-Added Functions:

• Automated reconciliation

• Financial coordination (e.g. matching payment flows with suppliers’ ERP systems)

• Account aggregation

• Fraud prevention and real-time transaction monitoring

In terms of business workflow, the process can be divided roughly into:

1. Enterprise registration →

2. Submission of trade contract or customs declaration →

3. Platform risk-control review →

4. Payment execution →

5. Fund-flow tracking and monitoring →

6. Period-end reconciliation

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I. Essential Base Scenarios

1. User Registration and Identity Verification (KYC/AML):

• Verify enterprise identity (business licence, legal representative’s ID) and disclose beneficial owners (UBO).

• Include screening for high-risk industries (e.g. cryptocurrency trading, cross-border trade).

• For enterprise clients, conduct qualifications review: validate business licence, confirm legal representative and UBO information, and screen against relevant black/grey lists.

• Consider whether to use OCR technology for business licence verification.

Questions:

• What are Australia’s regulatory requirements for identity verification and anti-money laundering (AML)?

• Which specific pieces of identity information need to be collected in our design?

• Are there third-party services that can provide verification of these identity data points?

2. Multi-Level Account Hierarchy:

• Main account (enterprise) + sub-accounts (department/project-level settlement).

• Virtual accounts (for quick receipt, similar to sub-merchant settlements on e-commerce platforms).

• Upon user registration, an account is automatically created.

Questions:

• In the early stages, is it necessary to establish a multi-level account structure? How does this relate to our model—do we have a “core enterprise” whose payment flows get split hierarchically?

• Are there Australian regulatory requirements for opening accounts in this manner?

3. Fund Custody and Compliance:

• Requirements for segregating customer funds from the platform’s own funds.

• Regulatory obligations regarding custody and operational compliance.

Questions:

• What are Australia’s regulatory requirements for fund custody and segregation?

• How should we ensure that customer assets are held separately from platform assets?

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II. Core Payment Scenarios

1. Submission of Trade Contract or Customs Declaration:

• Trade Authenticity Verification: Ensure consistency of key fields between the contract and customs declaration—e.g. product name, quantity, and amount. Verify that buyer/seller information matches the contract parties.

• Technically, consider using OCR and NLP to parse contract text.

• Questions: Who submits the trade contract? The core enterprise? Who initiates the payment request? These details depend on the overall process design.

2. Trade Settlement & Digital Letters of Credit (LC):

• Use blockchain smart contracts in place of traditional paper-based LCs (if required).

• Installment Payments: Disburse funds in stages based on order progress (How to track milestones? Possibly integrate with the core enterprise’s ERP or contract management system).

3. Supply Chain Finance & Dynamic Discounting:

• Suppliers receive early payment, and the platform calculates daily interest on discounted invoices.

• Extend the core enterprise’s credit to upstream suppliers (reverse factoring).

• Questions: Is there an existing platform that supports these functions out of the box?

4. Cross-Border Payments & Automatic FX Conversion:

• Enable automatic stablecoin conversion among multiple currencies.

• Questions: How to source stablecoin exchange rates?

• Compliance Reporting: Do we need to integrate with SWIFT or other messaging protocols to include trade background details?

5. Split-Payment (Split-Settlement):

• Platform enables automated revenue sharing among the platform, merchant, and distributors (similar to Alipay’s split-payment feature).

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III. Value-Added and Risk-Control Scenarios

1. Smart Reconciliation & Financial Coordination:

• Automatically match payment transactions to entries in the ERP system.

• Aggregate balances across multiple bank accounts with one click.

• (Recommendation: Consider deferring this to a later phase.)

2. Anti-Fraud and Transaction Monitoring:

• Real-time detection of abnormal transactions (e.g. multiple rapid submissions from the same IP).

• Determine whether AML controls are needed.

• In supply chain finance, coordinate with logistics and documentation for verification—e.g. verifying customs declaration numbers (can we connect to external data sources?), confirming whether logistics tracking (e.g. container GPS data) aligns with the declared destination.

3. Dispute Handling:

• Automated responses to chargebacks (submit logistics tracking numbers and other evidence).

• Fund freezing and unfreezing processes.

• (Suggestion: In the first phase, retain only customer complaint and fund-freeze workflows; defer other dispute-related features.)

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Next Steps / Questions to Confirm

Technical Preparation Phase

1. Which Blockchain to Choose?

2. Tokenisation of Receivable Certificates: Which Token Standard?

3. Identity Authentication: Who Are the Participants in Each Business Scenario?

4. What Are the Australian Compliance Requirements?

5. Other Questions Highlighted in Bold Above