Bitcoin is often hailed as the solution to the world’s remittance problems. It’s accessible to the unbanked, it’s nearly instant, and the fees are minimal compared to banks and other money transfer services.
But perhaps the biggest obstacle to bitcoin remittances gaining serious traction is bitcoin itself. The complex, unfamiliar nature of the cryptocurrency keeps would-be users at bay.
Bitcoin is slowly gaining public awareness, but Hong Kong-based Bitspark wants to skip the hassle and let users send remittances with zero required knowledge of bitcoin. The startup has just announced the first end-to-end cash remittances using bitcoin between Hong Kong and the Philippines.
Most bitcoin remittance services today work like this: a person takes the money they’ve earned and buys bitcoin. They then send the money from their bitcoin wallet to the recipient’s bitcoin wallet – usually a friend or family member back in their home country. Then the recipient swaps the bitcoin out for cash in the local currency.
But end-to-end cash remittance like what Bitspark has achieved is much simpler. Similar to Western Union, a customer just hands the cash over, and the recipient picks it up at the destination. Bitcoin, although it serves as the primary medium for this transaction, never enters the equation for the customer. There’s no need for a bitcoin wallet, and the cost is less than one percent commission.
A smartphone app and automated system are being developed to further streamline the process, but most people who require the service – Philippine maids working abroad in Hong Kong, in this case – want to send physical cash. For its debut, Bitspark set up a booth at the World Wide House building in Central, Hong Kong on Sunday, a location that’s popular with maids on their one day off each week.
“We did a number of transactions and gained over 400 potential new customers and we are looking to expand our services in this area over the coming weeks,” says Bitspark CEO George Harrap. Bitspark will continue to run its booth in Central every Sunday, although not necessarily in the exact same location.
About 140,000 Filipinos live in Hong Kong, most of whom work as domestic help and provide a high demand for cheap remittance services. Harrap says his immediate focus is on Hong Kong, but Indonesian maids are another large market he hopes to tap into in the future.
While end-to-end cash remittances using bitcoin might seem like a no-brainer, they are actually quite complicated beneath the surface.
“When doing it via bitcoin you need a healthy market of people willing to exchange cash for bitcoin at both ends,” Harrap says. “You also need a physical presence at both ends of the transaction, local marketing, deposit/pickup methods, tracking of payments, customer service in local language, et cetera. There are a lot of things to pull together.”
Laying the groundwork takes time and has to be done from scratch for each new pair of countries. BitSpark remittances are available for pickup at 20 banks and five money transmission offices throughout the Philippines.