In a big boost towards mass adoption of Bitcoin for remittances, the Japanese money transfer giant SBI Remit has enabled its nearly half a million customers to send money to Africa using the Bitcoin blockchain.
BitPesa, a venture-backed firm will be providing the new treasury management services to SBI Remit. The digital payments company has developed an enterprise payment rail that will facilitate faster and reliable transfer of money to the African continent.
A Direct Medium of Exchange
The system will replace the earlier method of first converting the Japanese Yen to US Dollars or Euros and then having to switch it back to the African currencies. BitPesa has created new currency pairs that eliminate the need for middlemen and banks for cross-border payments. The system which is transparent, reliable and operates in a trust-less environment will improve trade ties been Japan and African nations according to SBI Remit director Nobuo Ando. He added:
Many companies are doing trade with African countries, and they are suffering from the high cost and the slow speed and not very precise administration, so this is the market that we would like to go in, together with Bitpesa.
Increase in Trade
The collaboration between SBI Remit and BitPesa has significant implications for Japan and African nations. The partnership enables direct currency pairs between Japanese Yen and the fiat currencies of Kenya, Ghana, Nigeria, Morocco, Senegal, Uganda, Tanzania, and the Democratic Republic of Congo. The enterprise solution will also enable provision of liquidity for small and medium scale businesses, leveraging the existing custom treasury tools of BitPesa. The move will benefit electronics, cosmetics and used car markets in Japan and Africa.
Currently, traders pay 7% of the transaction amount in fee using the existing banking route. With the blockchain based system, BitPesa has brought the charge down to 3% resulting in a significant saving of 4% in addition to a quicker settlement time.
According to BitPesa founder Elizabeth Rossiello, the service is designed to insulate SBI’s customers from fluctuations in the price of Bitcoin or the fiat currencies. The company plans to cater to the African remittance market which is expected to grow at 7% to $41 Billion this year.
About SBI Remit
The money transfer company was founded in 2010 as a spin-off from Softbank, a fintech company. The company currently has 450,000 customers, and till date, the company has remitted close to 500 Billion Yen outside of Japan. A significant percentage of this money was sent to Africa. The company in 2016 had partnered with Ripple to create SBI Ripple Asia to promote Ripple’s service offering amongst the banks in the region. The company’s investment arm, SBI Investing had earlier this year established a 50 Billion Yen fund for investing in Blockchain and Artificial Intelligence start-ups.
For the Bitcoin developer community, this is good news, as the cryptocurrency was designed to facilitate cross-border payments in a secure, fast and easy manner. However, over the last few years, Bitcoin was looked more as a store of value due to scalability issues. With the implementation of solutions like SegWit and Lightning network, the time has come for the number one cryptocurrency and associated blockchain to serve the purpose it was intended for.
Do you think countries across the world should follow Japan’s example of legalizing the use of Bitcoin as a medium of exchange and pass on the advantages of adopting the technology to its citizens? Let us know in the comments below.
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