Why we are strengthening the payment process

EstateGuru has more than 50 000 investors and we are growing fast. Our investors come from many countries that have very different regulations for protecting private investors and requirements for payment service providers. Although crowdfunding does not yet have pan-European regulation in place, we have a fairly good idea of what constitutes best practise and what requirements will emerge:

  • Keeping funds securely and segregated
  • Making money movements transparent and traceable
  • Following AML/KYC procedures
  • Securing payments

When we dig deeper into various areas of EstateGuru’s services you can see two major domains where we thrive to be best in class:

  • Investing in real estate loans – both private and institutional investors. Ease of investment and return of investment.
  • Finding and selecting real estate loans for the platform – providing risk management, loan management, reporting, etc. Good quality portfolio and effective debt management.

So, our main business focus is on Investments and Loans, but there is a third invisible part – Payment management

This is the part of the business that needs to be delivered to the highest standards, in different countries and an operationally efficient manner. We have done years of work in this field ourselves but changing regulations (LHV Bank is not acceptable for local regulators in all of our operating countries)  and our growth plans have set us on a path to work further in this field with the help of a strong partner.

EstateGuru initiated the change of the payment service provider to be fully compliant with both the requirements originating from the Directives of European Union and national regulations, in our case mostly of Germany, Finland and Lithuania. As EstateGuru is neither a payment institution nor a payment service provider, we have to use a partner who has the corresponding license.

After investigating several payment providers from a business maturity, technological capability, regulative knowhow, and business terms aspect, we decided to choose Lemonway, https://www.lemonway.com/en/, as the primary payment  service provider for EstateGuru. Thanks to Lemonway, we are acting in harmony with PSD2 regulation and the local regulations of the countries where EstateGuru operates.

Expectations from the improved payment process and Lemonway

We have high expectations of the Lemonway payment service. We expect to have a payment service that has:

  • Compliance guarantees
  • Secure payments
  • Quick and easy payments with multiple banks
  • Opportunity to add other payment methods via available plugins (cards, local bank links etc)
  • API interface that is high performing and technically feature-rich and instant
  • Standardised way of tracking payments and improved automation
  • Segregated bank accounts / virtual IBANs
  • Low and predictable service costs (both for investors and EstateGuru)
  • Instantaneous KYC
  • Service provider knowledge sharing for local regulations.

How it works

EstateGuru has a master account with Lemonway. Dedicated accounts for investors and borrowers are issued under this master account, which they can manage via the EstateGuru platform. Instead of collecting funds and payments into a common account for EstateGuru, we will start collecting all deposits to dedicated individual accounts – be it investor deposits or borrower payback. No money is kept or transferred through EstateGuru’s generic bank account. Your EstateGuru investment account & loan account will be separated from money movement.  Money movement is only commanded via the EstateGuru platform. With the Lemonway process, we will have:

  • Investor virtual IBAN account in Lemonway (wallet)
  • Loan project virtual IBAN account Lemonway (wallet)
  • Transaction between wallets
  • Withdrawal from personal account
  • Pay out from loan project account directly to notary or borrower
  • Pay back to loan project account
  • Payback distribution from loan project account to investor accounts according to schedule and other agreement terms
  • EstateGuru bonuses, cashbacks paid directly to investor accounts by EstateGuru
  • In case of AML/KYC issues the impact can be limited to problematic accounts only
  • Using the account is by process commands and via system only (no human involvement).

Lemonway uses BNP Paribas as the main bank for storing funds.

Being transparent and responsible

In keeping funds and transferring money, the ‘How’ is as important as the ‘What’. Some recent cases in crowdfunding have shown there need to be mechanisms in place that ensure how funds are protected in case of management or regulatory issues. By strengthening the payment management process and how funds are kept in EstateGuru, we believe that we have made a good investment in the sustainability of the service and its trustworthiness.

Riivo Pilvik

Head of Product