Bitcoin remittance provider BitPesa has officially launched its beta test.
The Kenya-based company offers a 3% cut-rate fee, and is aiming to target the country's expats abroad who send $1.17bn home annually, according to The Wall Street Journal.
Users send their bitcoin to BitPesa, which then converts the amount into the local Kenyan currency and sends it on to the recipient. The service promises same-day delivery and no hidden fees.
BitPesa aims to disrupt a traditional remittance market that often imposes high costs on those wishing to use remittance services.
For example, the cost of sending money to Kenya by other means can be as much as 9.2% of the value being transferred by services like Western Union and MoneyGram, and 19.8% by banks, reports have found.
Disrupting the remittance market
Many have spoken to bitcoin’s potential in the remittance market, as cross-border money transfers otherwise come with weighty fees. The digital currency faces an uphill battle in that business though, mostly due to the costs of compliance and regulation.
Lawmakers’ attitudes toward bitcoin and digital currencies differ in each country – the kind of uncertainty that will become increasingly problematic as bitcoin gains popularity.
But BitPesa claims "end-to-end regulatory compliance and KYC protocol", helping to "eliminate fraud, increase the growth of bank balances" and gain back "the trust of valued diaspora clients", its website says.
Western Union currently accounts for about 31% of the total market, and MoneyGram 6%. Commercial banks account for 50%
BitPesa's competition
Still, while BitPesa is closer to reaching the market, it's not the only operator trying to use the power of the Bitcoin protocol to improve the global remittance process.
Coincove entered the bitcoin remittance market last year for Latin American expats from Argentina, Mexico, Spain and Chile, and BuyBitcoin.ph did the same one month later for Filipino expats.
Notably, Coincove saw its formal launch earlier this week, and though it offers and exchange and wallet service, it still sees a big opportunity in the remittance space.
For more on Coincove's launch, read our full report.
Image via BitPesa