The company has teamed up with Visa on card issuance driven by stablecoin tech and operates in 100 countries
Count Rain as a company whose founders saw the future before most. And they plan to be ready when everyone catches up.
Rain, which announced its latest $24.5M funding round this week led by Norwest Ventures, is a stablecoin-based global card-issuing platform. Founded in 2021 by CEO Farooq Malik and CTO Charles Naut, Rain sponsors and operates card programs as a Visa principal member.
Naut said he and Malik knew stablecoins would one day be ubiquitous. Their present effectiveness, however, was held back by a lack of utility in daily business and consumer payments.
“We saw that cards were a great way to solve this problem by adding utility to stablecoins, making them instantly spendable anywhere,” Naut said.
Malik came from a TradFi background where he experienced international money movement issues. He looked to stablecoins, which a subset of companies were already using as currency.
“We had this ‘aha’ moment that if early adopters are already expecting to use it as money and behave like money, then it needs to work and be interoperable like money,” Malik said. “Even today, if you look at traditional financial systems, there are a lot of countries where getting money in and out is very difficult; you can’t use card payment infrastructure.
“We realized that stablecoins have many of the hallmarks of what sort of these global currency systems look like, had some of the same challenges as other currencies, and some of the advantages of being a new type of exchange mechanism.”
With stablecoins being a novel concept, Rain had to incorporate several possible future regulatory stances when designing its systems. Malik said Rain could respond because the team quickly realized that digital money was becoming the standard.
“People were already using it, and they were dealing with the pain of using it,” Malik said. “Our thesis was that as technology and regulation evolve, building the Cisco, Ericsson, AWS or YouTube of digital money was going to be a place that was probably going to be a big economic opportunity.”
It’s also an area ripe for innovation. Malik said SWIFT and credit card companies don’t touch money; they just make it easier to move by reducing settlement and reconciliation times. Blockchain provides finality, so Rain just adds the infrastructure connecting users to it. While Rain’s original focus was on crypto-native companies struggling to move the ample amounts of capital they held on-chain, the mission expanded once the infrastructure was built out when Rain allowed companies to build atop its APIs to issue cards.
Visa was the perfect partner to help Rain aim for a global strategy. Regularity uncertainty prevented banks from getting involved, so Rain needed an alternative to access the rails. The company became a Visa principal member.
“It’s a global phenomenon, so we needed to build a global strategy on day one,” Malik said. “As we’ve built the business and stablecoin adoption has gotten bigger and less crypto-agnostic, it’s opened up a lot of opportunities for us to work with traditional financial services players.
“There’s no shortage of global platforms, whether it’s gig worker platforms or e-commerce marketplaces or players like Airbnb where there’s individuals globally that are transacting in the global marketplace, and platforms are accepting payments for people and then disbursing payments. What we’ve learned is that aside from the crypto-native use cases, there’s a tremendous amount of traditional financial services use cases for digital dollars.”
Rain already operates in 100 countries. Malik said that includes many regions where micropayments are an economic force. Reducing barriers below traditional $7-$10 thresholds allows users to access funds at lower costs.
Wherever consumers are in the world, Malik said some of their transactions will be in USD. Rain allows people to save on money transfers and payment fees.
Naut said Rain is designed so customers can select only the components they need to reach their goals, and aims to have customers live in two months. Some may have compliance or settlement structures, so they focus on other blocks
One clear sign that Rain is onto something is the number of prominent investors backing the company; in addition to Norwest Venture Partners, Lightspeed Venture Partners, Galaxy Ventures and Coinbase Ventures also participated. Malik said many partners have followed Rain for years and back its hyper-focus on digital money.
“As regulatory winds started shifting, they started clearing away some of that fog,” Malik said. “There’s this digital money ecosystem, which is stablecoin-based and blockchain-based in terms of authorization and information and settlement, that seems like it’s going to have an institutional life away from whatever happens with regulating memecoins or NFTs, or whether crypto is a security or if it’s a structured product or an asset.”
Naut and Malik are convinced the industry is going to need the utility Rain’s technology provides. Malik believes that includes more banks than many believe.
“Just like cell phones are regulated to be interoperable, I think that any reasonable regulation will have to account for that, so your Bank of America USD will have to work at JP Morgan or Chase or US Bank.”
