InsurTech Micropayments

Hey everyone! I’m currently involved in an InsurTech startup that is working on utilizing payment streaming in our business model. I’m totally sold on the abilities of ILP; however, I’m also a little overwhelmed. I’ve been working on our iOS app which is nearing beta; however, I’m running into some issues as I’m not very well versed in some of the underlying technicalities of Interledger. I’m currently working with the Xpring SDK, but I have some knowledge gaps in the underlying protocols that ILP uses. If anyone could point me in the right direction, or provide some advice that’d be greatly appreciated. Cheers!

Hey @garrett,

Thanks for your message! I can help you with the Xpring SDK, although it’s probably worth clarifying a few things beforehand.

First, let’s talk about some potential types of ILP payment network “actor.” For purposes of this discussion, let’s imagine the following three types of actor exist in any Interledger payment network:

  1. ILP Core Node Operator (e.g., Packet Processor, primary ILP infrastructure provider).
  2. ILP Service Provider (company that provides connectivity to #1, plus value-add like an SDK).
  3. ILP Edge Participant (e.g., startup with an app that lets it’s users make payments via #1 and #2).

Any particular entity (company, individual, etc) could potential play one or more of these roles at the same time. One thing to note here – and fair warning, IANAL – is that certain deployments of #1 and #2 may (depending on use-case) require that entity to get MSB licensing depending on jurisdiction.

OK, so hold that list of “actors” in your mind for a minute.

Next – I think it’s useful to conceive of Interledger/ILP from two distinct perspectives. First is to think of ILP as a suite of protocols; second is to think of ILP as a payment network.

As a protocol, ILP is similar to the Internet in that anyone who deploys software conforming to said protocol can interoperate with others doing the same.

As a payment network – just because one can interoperate doesn’t mean that one will allow it. So, from that perspective, there will be multiple distinct ILP networks in the world, and some (or all, or none) of them might interoperate. Currently the only “real money” network I’m aware of is the one centered around Coil. This network is not really “open” in the traditional sense because, in order to join, you would need to form a business partnership or commercial relationship with Coil before you could transact on it.

Outside of the Coil network, there are no mainnet ILP networks in operation (that I’m aware of). For example, the Xpring network is merely a testnet, so the SDK you’re using – while useful – will ultimately require that you operate ILP infrastructure and create your own network in order to make it “work” in your app.

I suspect that might come as a surprise (?) because many newcomers approach Interledger, at first, as if there exists a robust suite of vendors providing connectivity. However, this is not yet the case.

OK, with all of that context out of the way and in order to get you on the right path, let’s talk about your use-case.

Specifically: In the list of “actors” above, which do you foresee your app/company playing?

(In other words, do you expect to create your own ILP payment network for your use-case; or do you really want to connect to someone else’s ILP payment network so your users can make payments?)

Hey! Thanks for the response, it was very informative. Regarding which actor my company would identify with, I feel as though at our current state we would be an ILP Edge Participant (Actor #3). Our main focus is on the actual insurance aspect of the business model. MSB licensing may be a bit much to tack onto our current Insurance licensing at the moment.

Now that you mention Coil as the only current mainnet provider, I think it would probably be wise for us to approach them in a professional manner. Our goal is to build ILP infrastructure in the future, but this is probably not realistic for us at this stage due to the limitations of having a small team.

Mostly correct but a small correction. The current live Interledger network has 4 primary participants, Coil, Uphold, Gatehub and Stronghold.

Coil uses the Interledger network (via Gatehub and Uphold) to pay creators that have accounts at one of the other providers for their content. We (Coil) are not a licensed MSB so we don’t route any payments ourselves we just originate them from our own account.

If you are interested in using the Interledger network and having a business account with an existing node I’d recommend talking to Gatehub, Uphold or Stronghold about giving you a business account with them and a direct ILP link to transact against that account.

You’d then be able to run the ILP protocol stack yourself but you’d have a single uplink to whoever holds your account and any payments you send or receive on the network would go via that link.