fbpx

Kenyan Start-Up Plans International Remittance Services Using Bitcoin

Kenyan Start-Up Plans International Remittance Services Using Bitcoin

From Bloomberg:

BitPesa Ltd., a Kenyan start-up, will take on remittance providers like Western Union Co. (WU) by using the Bitcoin virtual currency to cut transaction costs for Kenyans working abroad who send home $1.2 billion a year.

The online service plans to start on a trial basis by March, after obtaining regulatory approval, and gain 1 percent market share within a year by handling 6,500 transactions a month, Chief Executive Officer Elizabeth Rossiello said yesterday in an interview in the capital, Nairobi.

Bitcoin gained credibility this month after law enforcement and securities agencies said in U.S. Senate hearings that it could be a legitimate means of exchange. The price of Bitcoin today traded at a record $1,098 apiece on the Mt. Gox online exchange, fueled by speculators snapping up the virtual currency as it gains wider acceptance.

“There are no other market entrants trying to solve the problem of the very high cost of remittances in Africa,” Rossiello said.

Western Union and MoneyGram International Inc. deduct $10 to $17 to wire $200 to Kenya from the U.S., including charges to exchange funds, in a process that can take an hour to five days, according to the World Bank’s Send Money Africa price database. BitPesa will charge 3 percent on overseas transfers and says the money arrives the same day. At that rate, it would cost $6 to send $200 via BitPesa.

Kenya is sub-Saharan Africa’s third-biggest recipient of remittances, after Nigeria and Senegal, with more than 3 million people of Kenyan origin living abroad. North America is the main source of remittances to Kenya, accounting for about half, followed by Europe at almost a third.

written by Eric Ombok | Read more at Bloomberg