Interviewed by Mark Herpel
Sunday, June 1, 2008
Digital Gold Currency Exchange Agent Sylvain Falardeau Talks About the Industry
Meet Sylvain Falardeau. He operates the digital gold exchange service xGold.ca and the DGC payment gateway Money Proxy.
Sylvain has in the past few years created innovative software for the integration of digital gold systems into everyday life. He markets and advertises online and offline. His local talents in Canada far exceed the marketing of any other agent I know in Canada. Even his business card is a scratch off free sample of digital gold.
His web site xGold.ca flawlessly integrates Canadian online banking and digital gold exchange. You can buy as little as $10 in gold for just a tiny fee.
His business slogan is a simple one,
"Gold at your fingertips"
"L'or à votre portée."
It's always a pleasure to discuss business with Sylvain. Here is my interview.
(Q) xGold.ca is an exchange provider for digital gold currency. There are now some popular e-currencies like Liberty Reserve which are not backed by gold. Have you considered exchanging for non-gold backed digital money?
xgold.ca is really about gold currencies. We do not expect to add any non-gold backed currencies. We are thinking to add c-gold in the coming months.
(Q) What is the most popular service that you provide to users? In the last three years since your business opened, what size growth have you seen in daily orders?
We have basically three services:
1. Gold to Bank
2. Bank to Gold
3. Invoice Payment
Gold to Bank is our most popular service. We now process 350% more grams with Gold to Bank transactions than in the first months of our opening. Our Bank to Gold service rose by 285% during the same period. In proportion, we have nearly twice Gold to Bank transactions than Bank to Gold. We are clearly buying more than selling.
(Q) What is your rate today on e-gold exchanges? Does that change daily? We have a 9.5% fee for Gold to Bank with e-gold. We monitor the market and our cash reserve then adjust the fees accordingly.
(Q) What is your goal in operating this DGC business? What would your mission statement say?
"Gold at your fingertips" really describe our service. After the first account authentication and authorization, buying gold is as easy as normal online banking. No wire transfers, money orders or Western Union.
Our goal was to make it easy for anyone to start buying gold. People normally think they need a lot of money to start. And with other exchange agent, you also have to get a money order or have to worry about fees (basic fees in Canada for wire transfers are 15-30$ + the time to get to the bank if you do not have the online web interface). The minimum amount for a Bank to Gold transfer is 10$. So even a student can purchase 10$ of gold with his paycheck every two weeks if he wants. It is basically, gold for everyone. When we started the project, we also tried to differentiate ourselves from other exchange agents. When we began in the field, we purchased gold from other well established agents. We sent wires transfers, they paid us when it cleared in their bank accounts. It makes it difficult to profit from an opportunity when the exchange rate of gold is low. In a couple of days, the gold may have risen quickly and you have lost a deal. At xgold.ca, all transactions are quoted at the time you approve the transaction. You know the amount in gold or dollars you will receive in your account: no surprise. This is really convenient for buyers and sellers.
(Q) Your service offers a direct online banking connection for customers. Is that only Canadian bank accounts?
Yes, we only deal with Canadian bank accounts. We aim to provide integration between the banking system and gold currencies instead of simply buying and selling gold. Our customers do not have to deal with wire transfers or money orders. They login, click "Bank to Gold", enter the amount, confirm the transaction and it's done. After the transaction clears, they receive the gold in their account.
(Q) How is your business, the Money Proxy http://www.moneyproxy.com coming along?
The system is fully operational but lacks integration with products available on the market. Our clients do not want to develop custom solutions when they implement a payment system. They want their cart software to directly support your service. Money Proxy was added to AEC, a Joomla! plugin to manage subscriptions. We will add direct support of our service in other products, like Virtuemart, in the coming months.
(Q) How does the Money Proxy work? How easy is it for developers to implement the Money Proxy into their web site or shopping cart?
It is a multi-currencies payment gateway. It allows merchants to offer many payment options to their clients without having to open and manage multiple accounts and systems. We provide an automatic exchange to gold, independent of the payment option used by the client. Every day, your merchant account, denominated in gold grams, is withdrawn to your e-gold or Pecunix account automatically. We provide a documentation for developers to integrate Money Proxy with their website. It is really similar to e-gold or Pecunix shopping cart interface. We also provide an interface in your merchant account to help you test your "callback" script (it is the script receiving the secure payment notifications).
(Q) If a exchange agent or web site owner wants to incorporate some of your software into their business, do you offer such integration and how would they go about contacting you regarding your applications such as Money Proxy?
Our experience in software development allows us to build custom solutions. People interested can simply get to http://www.moneyproxy.com/contact-us We will be happy to evaluate their propositions.
(Q) Do you ever see a time when DGC business will surpass credit cards for retail online purchases?
It would be fun to see, but, realistically, no. And this is not necessary for an alternate payment systems to succeed. I think what they need now is simply more merchants!
(Q) For enterprising DGC people in Canada, is there an opportunity to partner with your business and expand?
We do not have affiliates with xgold.ca yet. With Money Proxy, you can get a percentage of the fees we collect from the merchants you referred to us. We are open to business propositions or ideas.
(Q) You've told me before that xGold.ca is a Pecunix PREO, what does that mean and why are you one? Being a PREO does that help your customers?
The Pecunix PREO (Preferred Retail Exchange Organisation) are listed on www.pecunix.com as independant exchange agents. We decided to apply to let people know we exist and to be known by Pecunix administrators as legitimate agents. It helped our reputation, like being a member of the GDCA, to be recognized as trustworthy.
(Q) As a Canadian user, if I sell Pecunix to you today, when will the funds post in my account?
For Gold to Bank, it is two business days. Our system will calculate the exact deposit date, taking into account banks holidays and week-ends. So before accepting the transaction, you know when you will receive your dollars.
(Q) Do you offer the lowest rates for Canadian buyers?
I think our rates are really good, considering the fact that you have the control *when* you buy/sell and eliminate the risks of rapid gold exchange rate changes.
(Q) What is the absolute smallest CAD purchase I can make using your service?
0.5 grams for Gold to Bank, 10$ for Bank to Gold
(Q) I know you offer a DGC bill pay service, can Canadian customers. This is a first of its kind for DGC users in Canada?
Yes, we offered this service but it is temporarily out of service now (scheduled to resume this summer). It was used by a minority but was more a marketing strategy. When we introduced people to gold currencies, they asked "but, what can I do with this gold in my account?". It was interesting to let them know they can pay their electricity/phone/cable/etc. bills like they do with their online banking interface. We have 2300+ utility companies in our database. It is more than the number of merchants accepting gold currencies right now!
(Q) As a Canadian bank account holder, what do I need to provide in order to begin exchanges through xGold.ca?
For Gold to Bank transactions, you enter your bank account number online and you can make your transaction right away. For Bank to Gold, you have to fill and send a banking authorization form by mail. A voided check should be included with the form. After verification, we activate your account with a limited amount (300$/month). If you need larger amounts, we ask for other authentication documents (passport, driver license, utility bills).
(Q) I've seen that great sign you have for your car door, I think that is excellent advertising and peeks people's interest. What other advertising have you done and do you target specific groups?
We have done radio promotions in Quebec. We offered a cinema ticket for 1$ (to be paid in gold). We also have a "scratch" business cards acting like a voucher. You simply open a gold account and we deposit a quantity of gold instantly. It helps to get people started with at least something in their account. There is also the spudz which is very popular. It is a microfiber cloth for lens and computers. Even people not really interested in gold like it and it gives us great visibility.
(Q) When I interviewed you about one year ago, regarding the percentage of exchanges which were e-gold or Pecunix you stated that, "...90% of our business with e-gold.". With all that has happened in the last year with e-gold, how is your business split today between Pecunix and e-gold?
Now, we have people buying Pecunix and selling e-gold. Not really surprising with the current e-gold market.
(Q) Do you still have faith that e-gold will survive the onslaught of problems the government has created by their attacks?
I hope e-gold will prevail. I am not aware of all the details of the case but one thing is sure: the current situation of high out exchange rates make it less appealing to new users.
(Q) In a previous interview with me you stated that, "We out exchange with Omnipay." Do you still use OmniPay and has there been any interruption in that service?
Omnipay closed his service last year. It was supposed to be temporary because of a relocation to Africa but they did not resume their service yet. We now use other e-gold exchangers for out exchange when necessary.
(Q) I assume you have seen the recent high rates some agents are charging for e-gold exchanges. Will you be able to continue providing e-gold services if the high rates persist?
If it continues for too long, we may drop e-gold completely until the case is solved with the US DoJ.
(Q) Webmoney Transfer is automated to receive payment vouchers from what I often refer to as 'cash to digital services' around the globe like Ukash, paysafecard, cashU and ever paymer. Customers pay cash locally, receive the voucher, log in and instantly fund their WM accounts with the voucher numbers. Would you consider automating your business to include global payments from sources like these?
We thought about implementing this option when we began working on xgold.ca. Our business cards are an example of vouchers you can cash instantly. But, to be effective, you need a good number of places where you can purchase these vouchers. We may expand our payment options in the future with technologies from other companies but will have to be sure their terms of service allow the purchase of digital gold currencies.
(Q) Does your service allow user to automatically move value from Pecunix to e-gold? (autoexchange)
No, they cannot do it directly. We did not want to enter this market because other exchange agents did it. We wanted to be different. But this is not definitive, we may implement it in the future.
(Q) A year ago, the price of gold was about $650, I've always been curious to ask agents, have you made more profit on the rise in recent gold prices or your customer exchange fees?
We always make more profit from the rise in the price of gold than with our fees. I think you cannot separate the fees and the money you gain/loose with the exchange rate of gold in the long run. If we only made 3% profit on transactions, we would not be in this business anymore.
(Q) How much gold do you have on you right now?
When I meet new people, I normally have an once of gold and business cards loaded with grams of gold. They are always amazed: what? 900$ for this small thing! The most surprised are the one I first met a couple of years ago. They ask "was it not at 500$ the last time we've met?". And they are the one not buying gold or even exchanging their electronic business cards I gave them. Go figure.
I'd like to thank Sylvain for answering my questions and sharing his industry insight with us.