Sofitto: Instant money transfer with a Banking Card

What is Sofitto?

Sofitto is a FinTech startup, established in January 2016 with a subsequent incorporation in November 2016. Sofitto aims to merge Blockchain technology into conventional banking card products through the development of the ‘Sofitto card’. The Sofitto card enables an autonomous store of value directly on the card, which disrupts the traditional card and remittance system. With only marginal infrastructure expenses and transaction costs, this new banking card will significantly lower the barrier to enter into banking services, while at the same time, it will reduce the maintenance costs pertinent to conventional financial networks.

How does the Sofitto product solve customers’ problems?

By adopting the Sofitto technology, a partner Bank will address these five unique value proposition points within the huge market of small value transfers:

  1. Real-time Transfers & Credit: Customers are able to receive money in seconds, for the Beneficiary to be able to spend.
  2. Native Credit: the money will be natively credited to user’s bank card. Nothing special has to be done. No extra steps like visiting a Western Union office.
  3. Low Cost for Transfer: Due to bypassing costs of the conventional Networks.
  4. Works without smartphones: Not everyone has a smartphone. The solution works within the legacy banking infrastructure like ATM/POS terminals. Legacy user experience.
  5. Wider Acceptance: The users are not exposed to the complexity of handling crypto currencies. Instead, all the operations are done in regular currencies (EUR, USD etc.) and your card number is recognized as the beneficiary account for a transfer.
Benefits of Sofitto for Financial Institutions
  1. Reduces Settlement Time: Banks can fulfill and settle international money transfers in real time, while increasing profitability via a reduction in liquidity and operation costs.
  2. Reduced fraud: transparent and immutable data on the distributed ledger can reduce fraud, provide automated compliance, monitoring and audit procedures.
  3. Easier customers’ onboarding: streamlined KYC effort with distributed databases of client information shared between institutions could help reduce duplicative efforts.
  4. Reduced costs: with fewer participants and less manual intervention enabled by smart contracts.
  5. Open new markets: with modified cost structure of micropayment.
  6. Delegated KYC/AML: No name cards are distributed via partner retail networks with the over-the-counter KYC. Automated AML limits and checks using smart contracts.
LHV – Sofitto pilot in Estonia

Our partner and investor, AS LHV bank (Estonia), has a rich experience in traditional banking infrastructure and payments. LHV bank is maintaining a strong footprint in the remittance market in partnership with TransferWise. In 2015 LHV Bank became the first bank to start a real world experiment by issuing 100 000 EUR worth of cryptographically protected claims against the bank into bitcoin blockchain. CUBER (Cryptographic Universal Blockchain Entered Receivables) is technically a new kind of certificate of deposit and is meant to be a building block for various innovative financial products. Sofitto broadens the adoption of CUBER like products by interfacing it to an ordinary user via already deployed ATM/POS networks. To use an ordinary chip-and-PIN card is by far the simplest way to make a cashless payment. By simply combining “something I have” – a card with “something I know” – a PIN, one will be able to make blockchain payments or funds transfers on the legacy banking infrastructure without knowing anything about crypto currencies. Our Blockchain metadata is sent to the Sofitto backend through financial networks in a ISO8583 message format using custom EMV tags. Our project attracted the market leaders in the digital payments domain. Our first LHV-Sofitto bank cards will be produced and customized by Trüb AG (part of the Gemalto group, Switzerland) with the domestically formatted primary account number (PAN) derived by LHV bank. ATM/POS terminals will be provided by First Data and Nets. Customized partner ATM/POS terminals will be communicating the transaction information directly to the bank’s backend and thus alleviating the charges of the Financial Networks or 3rd party payment processors. The partner terminals can have a directly installed Sofitto app, which will immediately engage the end customer for cash-in/out and transfer operations.

User Story for the Summer 2017 pilot launch:

Helen lives in Tallinn. Her bank account is empty and her card withdrawal has just been rejected by ATM. John who lives in New York agreed to send Helen EUR 50.-. John launches the SFT app on his smartphone, selects Helen’s card number and opts to send 50 euros. The SFT app asks John to tap his card number on the phone, type PIN, and “DONE”. John sends a message to Helen: “The money is on the way to Tallinn. The next second Helen inserts her card into the ATM of LHV Bank. She requests to withdraw 50 euros as it would be the case with a normal bank card. Helen gets her money from the ATM.


Transborder transaction flow using the Sofitto blockchain solution