Remittance Startup Uses Bitcoin Digital Currency as a Bridge Between Bank Accounts Brian Patrick Eha - American Banker
go to original April 7, 2017

Exploring Bitcoin digital currency (Journeyman Pictures)

A startup called bridge21 thinks it can use bitcoin to beat banks and money transmitters at the international transfer game - at least for remittances to Mexico.

It works like this: The startup allows any user with a U.S. bank account to send money to a Mexican bank account. Dollars are withdrawn from the user's account and used to buy bitcoin, which, in a news release, bridge21 refers to simply as "digital cash." The company then sends the bitcoin to Mexico, where it is sold for pesos, which are deposited into the recipient's bank account.

The process takes only minutes, following a single confirmation on the bitcoin network.

"Our rates are based on the price of digital cash in the sending and receiving countries, not the bank exchange rates used by everyone else,” Will Madden, bridge21's founder and CEO, said in the release. “This means we can often send money at rates no other money transfer company or bank can offer."

Bridge21 is often able to send money to Mexico for 2% or even 5% less than the midmarket rate, he added.

The company has chosen a fraught time to launch its service. As immigration has become a hot-button issue in recent years, remittances have come under fire. President Trump has said he wants to confiscate a portion of Mexicans' remittances to pay for his border wall. Meanwhile, bitcoin is going through one of its periodic constitutional crises, with a technical debate over how to scale the network threatening to split the currency into two competing systems.

But the problem bridge21 seeks to solve is real. Remittances are costly, and the poorest or more desperate people are often charged the highest fees.

Global remittances totaled more than $601 billion in 2015, according to World Bank estimates. In order to send money home to their families, migrants pay billions in fees. As a result, cross-border payments, and particularly remittances, are often mentioned as an area of finance that fintech in general, and bitcoin specifically, could disrupt.

Read the rest at American Banker

Related: The Art of Building Bridges to Cross-Border Payments (Bitcoin Magazine)

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