Bitspark is launching a bitcoin-enabled remittance service in Hong Kong aimed at Filipino domestic workers sending wages back home.
The startup promises much lower transaction fees than banks and other money transfer services, purely because it uses bitcoin. Bitspark charges a 1 per cent commission, significantly lower than the 3.5 per cent it costs to send money to the Philippines from Singapore, a figure tracked by the World Bank, which doesn’t track the Hong Kong-Philippines remittance corridor.
Bitcoin has a great potential for reducing remittance costs, but as a new technology, those hoping in emerging markets hoping to benefit from these savings often have no way to convert the funds into fiat. Bitspark allows senders to pay in cash and offers a range of ways for recipients to collects the funds.
The startup has made a deal with Philippines remittance provider, Rebit, which handles conversion of bitcoin funds to pesos. The partnership means that Bitspark customers can send their funds to one of 20 banks in the Philippines, as well as other popular collection spots like the Palawan chain of pawnshops.
The remittance process controlled by Bitspark keeps bitcoin largely out of customer’s view. But the service is constantly monitoring bitcoinprices in Hong Kong dollars and pesos to find a favourable rate, CoinDesk reports. When it finds a suitable price, it converts the cash it’s been handed into bitcoin and sends it to Rebit, which in turn converts the coins into pesos for collection. The funds have to be ready for collection within 24 hours.
Bitspark also guarantees the amount a recipient would collect, so there is no risk of volatile bitcoin prices eating into customer transactions, Bitspark’s chief executive George Harrap said.
“With cash-in, cash-out remittances, you don’t need to know about bitcoin to use it. It just so happens to be the best rate around [so] people will use it. You don’t need to explain [bitcoin] to them,” he said.
Bitspark is planning to raise more funding to expand into other remittance markets such as China and Indonesia.
The company was originally selected for a Hong Kong government incubation programme in July. It gets up to HK$530,000 for being part of the programme, which is run by an organisation called Cyberport.
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