SoftBank veteran hunts for profits in payments infrastructure plumbing

In the summer of 2020, as pandemic-driven volatility gripped markets, SoftBank Group shocked Wall Street with a series of huge options bets on US technology stocks. Behind those trades — which earned SoftBank the “Nasdaq whale” moniker — were InexhaustibleAn executive whose career has been marked by bold bets on disruption.

Now, after orchestrating multibillion-dollar deals, including efforts to merge Nvidia and ARM, Naheta is making perhaps his most ambitious bet yet: that the world’s payments infrastructure is ripe for reinvention.

His Zug, a Switzerland-based startup, Distributed Technology Research (DTR), is trying to bridge the gap between traditional banking and blockchain technology, joining the army of companies trying to modernize the global payments infrastructure.

The startup claims its technology can eliminate various payment inefficiencies, from transfer costs and exchange fees to foreign currency conversion charges and settlement delays. “Current payment networks suffer from inefficiencies – transfer costs, exchange fees, FX conversion charges, settlement delays and other opaque fees,” Naheta told TechCrunch in an interview.

DTR’s core technology, AmalgamOS, essentially connects banks to blockchain networks Through APIs, it allows businesses to integrate payment capabilities while maintaining compliance with local regulations. The system can handle everything from merchant payments to treasury management, supporting both fiat currencies and major stablecoins in 48 countries.

The startup has built what Naheta describes as an “international orchestration network” that automatically routes transactions through traditional banking or blockchain rails, depending on which path offers the best combination of speed and cost. “We are connected to 12,000 banks in Europe,” he said in an interview. A business integrating DTR’s API can let its customers initiate transfers directly through the banking app.

DTR’s foray into payments infrastructure comes at a seemingly opportune time. Visa and MasterCard – both Charge 2-3% swipe feeTypically the second-highest cost for merchants after payroll — they are facing increasing scrutiny over their duality, and proposed U.S. credit card competition legislation could require banks to offer merchants alternatives to dominant networks.

DTR’s early customers say its infrastructure fills a significant gap. Philip Lord of Obit, a crypto wallet startup, said the system allowed his company to transfer money from its crypto wallet to a UK bank account on Christmas Day in 30 seconds – a transfer that would have taken days through traditional channels.

Naheta’s interest in payment infrastructure stems from an unlikely source: SoftBank. Acquisition of Fortress Investment Group In 2017. The deal puts about $20 million worth of bitcoins on SoftBank’s balance sheet.

As he studied the underlying blockchain technology, Naheta said he saw an opportunity to apply his background in wireless communications to payment networks. While at SoftBank, Naheta began assembling what he hoped would become DTR’s founding team. He reached out to his graduate thesis advisor, Pramod VishwanathAn expert in wireless communications who now leads Princeton’s Blockchain Center and Sriram Kananwho will start later own level.

The team envisions blockchain as a peer-to-peer communication network that could apply decades of research in wireless systems to revolutionize payments. Naheta said he almost resigned from SoftBank in the summer of 2018 to focus on DTR and crypto ventures, but was persuaded to stay by senior executives including Rajeev Mishra and Masayoshi Putra.

Naheta’s previous forays into the payments sector included SoftBank’s investment in Wirecard, which later collapsed. SoftBank still made a profit on its investment in Wirecard. “I made a lot of mistakes,” he admitted. “I looked at it from one perspective, here’s a company that has all these regulated licenses around the world, obviously with payment technology.”

These experiences seem to have influenced DTR’s emphasis on compliance and institutional credibility. This measurement method extends the company’s growth strategy. “Even if I increase my headcount to 60 people by the second quarter, we will be free-cash-flow positive,” he said.

The startup faces competition on multiple fronts. Wise has built a successful business matching currency flows between countries, Ripple offers blockchain-based settlement despite its legal troubles, while traditional banks also say they are upgrading their systems through initiatives like SWIFT. Last, but not least, is Stripe’s Recent $1 billion bridge acquisition Helping the World’s Most Valuable FinTech Startups Delve Deeper into Payments

Yet Naheta sees an opening in services businesses caught up in this world — particularly digital nomads, maker economy platforms and companies operating across emerging markets.

“Banks are not equipped to run KYC/AML at that small level, where you are paying $200 to 10,000 people per month,” he argued. The fragmented nature of national payments systems creates particular challenges for businesses operating globally, as each jurisdiction maintains its own rails and regulations.

The payments industry’s high margins and network effects make it notoriously difficult to disrupt. Even after recent declines, PayPal has a $70 billion market cap, while Visa and MasterCard are worth more than $1 trillion.

“I really think that retail customers are getting fed up with payments,” he says. “And it’s not the bank’s fault. They are tied to legacy systems and turning Titanic is very difficult.”

Lord of Obit said in an interview that the space is wide open. He noted that until just a year ago, the only option for businesses to transfer between crypto and traditional banking systems was to “go to an OTC shop and pay maybe 1 to 3% to transfer it.”

“It’s crazy that over the years, we’ve had so many startups come in, we’ve had so many coins seen, and whenever I wanted to on-ramp or off-ramp, there was no other formal legal concept system. Around,” he said. DTR’s solution is “one block faster” than alternatives.