DEFINITION of 'Circle (Financial Services Company)'

Circle is a Boston-based financial services company that uses blockchain technology for its products. It was started in 2013 by Jeremy Allaire, who previously founded Brightove, a video platform company, and Sean Neville. The company has raised $140 million in funding and is backed by investment bank Goldman Sachs and Chinese search giant Baidu Inc., among others.  

BREAKING DOWN Circle 'Circle (Financial Services Company)'

Circle’s website states that its mission is to change the global economy. The company’s first product is an app called Circle Pay. The app was a bitcoin trading exchange. Circle Pay was the first exchange to be granted a BitLicense, New York state’s license for operating bitcoin exchanges.

The UK’s Financial Conduct Authority (FCA) also granted Circle an electronic money license. In December 2016, Circle Pay’s focus shifted to peer-to-peer payments or “global social payments." Circle also launched an open source software project in 2017 to promote payment technology.

Circle’s main product is an app called Circle Pay that enables instant and free money transfer between individuals. The service is similar to Paypal’s Venmo in that it can be used for daily transactions, such as splitting meal costs or making rent payments. 

The Circle Pay app is popular with Millennials in Europe. According to the company, 90% of its customers there are below 35 years of age and 60% are less than 25 years old.  In June 2017, Circle Pay announced the integration of a free money transfer service between the United States and Europe. While announcing the launch, Circle founder Allaire said the company was working towards realizing its vision of no distinction between international and domestic money transfers.  

Circle’s open source project is called Centre and is named after the Cent Routing Exchange protocol it uses. Transfers within the app take place using Centre tokens (CENT), an ethereum token. The project enables transfers between consumer digital wallets that support different currencies. It is also intended to help financial services company comply with existing regulations, such as KYC and AML, by enabling disclosure.

As of 2016, the project currently works in the United Kingdom, Europe, the United States, South Korea, and Philippines. For example, a user in the U.K. can convert British pounds to Korean won and transfer them to a digital wallet user in Korea using the app. 

Centre currently runs on ethereum’s blockchain but is designed to run on other blockchains as well. Allaire has said the protocol’s nodes will consist of payment technology apps, such as Paypal and Paytm. 

How Does Circle Make Money? 

Circle’s products are freely available in App stores and the company does not charge fees for transactions or transfers. It makes money through trading of bitcoin and other cryptocurrencies in Over the Counter (OTC) markets and at digital exchanges.

In an August 2017 tweet, Allaire said Circle was the biggest crypto asset trader in the world. The company trades in bitcoin and ether and is a market maker on all major exchanges. It also provides OTC liquidity services to institutions. In the future, it may launch products that generate revenue.

“We will have future, higher-level products that we fully intend to be revenue-generating, but this first basic product needs to be free,” co-founder Sean Neville stated in a 2014 blog post. 

Circle’s Business      

Circle processed $1 billion in transactions and its customer base increased more than tenfold in 2016. It entered China, a massive market for payment apps, in 2017. The company’s focus in China is on “connecting out” or enabling flow of payments going out or into China. As an example, it aims to facilitate money transfer operations for Chinese students studying abroad. 

Circle’s technology and idea of using blockchain-based tokens is similar to that of Ripple, another company focused on reducing the cost of international money transfer. However, both apps target different markets. According to Allaire, their product is targeted at users of payment apps, such as Paypal and Venmo. Ripple is working with banking institutions to implement its technology.

  1. Apple App Store

    The Apple App Store is a digital distribution platform where ...
  2. Current Transfers

    Current transfers are current account transaction in which a ...
  3. Transfer Payment

    Transfer payments, in the United States, are payments made to ...
  4. Bitcoin Exchange

    A bitcoin exchange is a digital marketplace where traders can ...
  5. Book Transfer

    A book transfer is the transfer of funds from one deposit account ...
  6. Ether (Cryptocurrency)

    Ether, often perceived as the native currency of Ethereum, actually ...
Related Articles
  1. Tech

    What Is Circle X and Why Should Cryptocurrency Exchange Coinbase Be Worried?

    Circle X is a startup that recently bought Poloniex and plans to launch a rival to cryptocurrency exchange Coinbase.
  2. Tech

    5 Fintech Firms Emerging in Boston (GS, PYPL)

    Find out which startups that are emerging as Boston's top fintech companies are already disrupting the financial services industry.
  3. Tech

    How Digital Payments Will Change Commerce in 2016

    The way we transfer and spend money is constantly evolving, and 2016 is poised to expand digital payments like we've never seen before.
  4. Personal Finance

    Cyber Monday: Is This App Safe to Shop In?

    There’s been a surge of phony retail and product apps appearing in Apple’s App Store recently. Here’s how to know if an app is safe to shop in.
  5. Tech

    Ripple, Santander Launch App for Intl. Transfers

    Ripple and Santander Bank have launched an app that promises cheap and quick currency transfers.
  6. Tech

    7 Apps Every Financial Analyst Should Have

    Review the seven best mobile apps for professional financial analysts for streamlining up-to-date information and performing data analysis.
  7. Investing

    Now Is The Time To Buy Gold And Silver (GLD, SLV)

    Based on the charts of these gold and silver ETFs, now could be an ideal time to invest in precious metals.
  8. Investing

    Apple's App Store Hit Record $300 Million in Sales on New Year's Day

    Apple kicked off 2018 with a bang.
  9. Tech

    Blockchain Technology To Revolutionize Traditional Banking

    Blockchain technology is being taken seriously by the financial sector as it may prove to be a great disrupter to the traditional banking industry.
  10. Small Business

    PayPal Vs. Venmo: Function versus Fun (PYPL, EBAY)

    PayPal and Venmo are both great services depending on what the customer wants.
  1. What are the advantages of paying with Bitcoin?

    Learn how payments made with Bitcoins offer certain advantages over standard currency, including user anonymity, no taxation ... Read Answer >>
  2. How does transfer pricing help business?

    Explore several ways that transfer pricing helps businesses. Transfer pricing can often help streamline accounting and business ... Read Answer >>
Hot Definitions
  1. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  2. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  3. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  4. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  5. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  6. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
Trading Center