Finance is the elixir that runs today’s global economy. It is the very foundation that allows businesses to grow beyond boundaries, banks to influence global policies and countries to claim global dominance.
Over the last few years, the payment industry has seen constant evolution due to the introduction of new actors (like GAFA and neobanks), new payment methods (Apple Pay, Google Pay, Zeetle etc.), mergers, acquisitions, and new technologies (cryptocurrencies). The evolution is significant for the growth of the industry but these new actors come into the market with the mindset of making a profit without any sense of social, environmental, and economic responsibility. This profit-making mindset makes these services very expensive for the users.
With billions of users using these services, one would think that the finance sector should be accountable for its responsibility towards a sustainable environment. Contrarily, there exists a considerable asymmetry between the impact and corporate social responsibility (CSR) of the finance industry. To make things fairly simple, CSR is actually that one step of responsibility that every organization should take to have a positive impact on the environment and society (community, nation, people, etc.) affected by their activities.
Where the Finance Sector Actually Lacks
Finance, being at the very core of our economy, has a huge impact on our carbon footprint. A paper published in 2017, “Pollution caused by finance and the relative policy analysis in China,” analyzed a dataset over the period 2004–2014 to understand the relationship between finance and pollution. It found a 1% increase in finance (measured by credits to GDP), causes pollution to rise by 4.29%.
In 2019, another finding by Oxfam France revealed that French banks like BNP Paribas, Société Générale, Crédit Agricole, and BPCE caused a colossal carbon footprint of more than 2 billion tons of CO2 emissions in 2018 alone. This is a mammoth footprint that we cannot ignore. The finance industry needs to reinvent itself to adapt to its environmental responsibility.
And worse yet, an organization’s responsibility is not limited to its carbon footprint. It also includes its social and economic responsibilities. The UN Human Rights Council has widely criticized the discriminatory lending practices by financial institutes. It is seen that during the subprime mortgage crisis, individual brokers target minority borrowers for loans they are unlikely to afford in the long term.
Another grudging problem for our current centralized finance sector is the commission the financial intermediaries charge their customers. When retailers make a transaction, the intermediaries charge them between 1.75% to 5% in commission. This oversized proportion of fees clearly shows the heavy hand of the centralized players exercising their monopolistic powers in the industry. What we need is an ethical financial system that bears a social and environmental responsibility equal to its fair economic weight.
Retreeb: Bringing the Real Revolution Finance Needs
As consumers become more inclusive and responsible towards the environment, their consumption patterns and expectations change. Retreeb brings the new-age decentralized payment revolution where there is no contradiction and the conflict between growth and responsibility. Based on the universal values of ethics, sharing, and solidarity, Retreeb is the first distributed payment solution that shares one-third of its network fees to fund social and solidarity projects of the users’ choice.
With their ethical financial system, Retreeb presents itself as a disintermediated means of payment that is free of interbank commissions. First, it gives consumers control over their financial transactions while placing corporate social and environmental responsibility (CSR) at the heart of their business model. Their decentralized solution brings much-needed transparency to the industry.
Understanding the Retreeb Financial Model
The crucial developments brought by Retreeb in finance are beneficial not only for society but also for the sustainability of the industry itself. For each payment made on the Retreeb payment network, it charges the merchant a nominal fee of 0.9% to 1.5%, which is significantly lower than the usual 1.75% to 5% charged by Visa, Mastercard, banks, and payment providers like PayPal. Thus, it makes finance more consumer-centric. Keeping in mind its responsibility towards a sustainable future, one-third of Retreeb’s income is donated to the social project selected by the user on the platform.
The Retreeb financial model is standing on two pillars – tokenization of transactions and very low cost SEPA credit transfers. The project achieves tokenization of transactions using a fork of Fantom’s “Lachesis DAG” based on the Lachesis Protocol. To put it in very simple terms, a set of links are established between events to form a DAG. Here, DAG is a distributed system that stores arbitrary data that no one can change. To know more about “Retreeb’s architecture”, read here.
The second pillar, i.e. SEPA credit transfer ensures the circulation of fiat financial flows. This, in turn, enables Retreeb to regain control over the transaction in order to apply its business model. What happens behind the scenes is that Retreeb uses CELL Hub as its transaction protocol. This protocol communicates with Fantom, to schedule the various nodes of the network. It provides Treeb (Retreeb’s multilocal stablecoins) on demand when users load their digital wallets, and burns Treeb when converting into FIAT money, thus organizing the flow of assets (tokens & fiat).
Shaping the Future of Ethical Finance
With its customer-centric distributed infrastructure, Retreeb is building a redistributive economic model away from the opaque, expensive, and unfair traditional payment system. With ethics, transparency, solidarity, and the interest of its users at the heart of its transactional process, Retreeb is reinventing the payments industry towards a profitable yet sustainable model. It has set up an example for financial institutions to correlate within its business model, social contribution (CSR), and business performance.