Further a cause of social giving by using remittances as a vehicle for supporting charities in destination countries Thailand and Nigeria
Applicant name: Bitso
Innovation Name: Bitso Partnership with Ripple
Innovation Type: Product and Service
Mission: We are very aware that today, remittances happen mainly through money transmitters, this is due to the prevalent use of cash on both sides of the border, which makes physical locations continue to be an essential component for this type of Money transfers. And We want to be the bridge that connects the traditional economy with the digital one.
Bitso is a simple platform to buy, sell and use bitcoin and other cryptocurrencies in your daily life, with operations in Mexico and Argentina. It currently has over one million users. It started operations in April 2014, with the goal of giving it’s users access to the new digital economy and make crypto useful and accessible to everyone.
As an introduction to this new product, it’s important to mention that currently, remittances from the United States to Mexico are carried out mainly through money transmitters, where costs are very high and a large proportion of the money is spent on commissions.
That’s why for a few years, we have been working to create a strong partnership that allows us to apply our services to make this process more efficient. We did this with Ripple, our partner who helps to unify all the steps of this process with the product: On Demand Liquidity (ODL). In this process, the large money transmitters in the United States become our clients.
Through this new product, traditional money transmitters are using our infrastructure to send remittances, reducing transaction costs and reaching final beneficiaries more efficiently, even if the beneficiaries don’t perceive it directly.
The process is simple:
1.- The user comes to the United States with a money transmitter to send dollars to Mexico in the way that they have always done.
2.- The transmitter requests a money order with an exchange in that country.
3.- The transmitter buys XRP cryptocurrencies with the dollars they receive from the clients.
4.- The money transmitter sends Bitso the cryptocurrencies in a matter of seconds.
5.- We sell them in the market and deposit Mexican pesos to the money transmitter’s account in Mexico.
6.- The user collect their money in Mexico in a much faster and safer way, although he doesn’t perceive that the process was carried out with cryptocurrencies.
It’s a simple, automated, digital and transparent process, and it has many advantages compared to traditional processes. For example, transactions are much faster, since they are carried out in minutes, unlike the weeks that can take with the traditional method; Also, they are much cheaper, and although users don’t perceive that the process has been carried out with this technology, they have the option of carrying out the same process at a much lower cost.
What was the inspiration for this innovation? It’s very exciting for us to be able to use all the technology that we have developed and start building use cases with cryptocurrencies that have a direct impact on people’s lives.
We know how important it’s the remittance corridor of the United States – Mexico and also how important it’s for Latin American families to receive money from their relatives abroad. That’s why we decided to promote this use case with cryptocurrencies to make this process much more efficient, fast and cheap.
What we are observing is a substitution in the method of sending remittances. Companies that usually used conventional methods to send money to Mexico are beginning to use our product to send money to the country.
The process is simple, automated, digital and transparent, and has many advantages compared to traditional processes. For example, transactions are much faster, since they take place in minutes, unlike the weeks that can take with the traditional method.
Who benefits from the innovation most? As it’s a product intended for large money transmitters, the first beneficiaries are them, who can decrease the costs of sending remittances (making them much more competitive in the market) and reducing the time it takes to send remittances. Users never know their money was sent through cryptocurrencies, but they see a lower cost and that they receive their money in less time.
What are you most proud of about your innovation? We are very proud of this project, since since the launch of the product, we have observed the average volume growth at a rate of 15% per week.
It’s important to point out that the figures represent the volume operated in a given week. In other words, the volumes that we are processing in this type of transaction represent 2.5% of the volume – of all remittances that entered the country. In March 2020, we reached 5% of all remittances sent to Mexico. This means that we process more than 645 million pesos in remittances in one week.
Status of Innovation: In-market
Innovation Active Since: 11/1/2019
Applicant Type: Private Company
Headquarter City: Mexico City
Headquarter Country: Mexico
Year Founded: 2014
Main Category Choice: Remittances For Social Impact
Why do you think you should win this category?:
Since Bitso’s founding, we have aimed to use cryptocurrency technology to send and receive remittances, as we are firmly confident in its potential to make international payments. At last, at the end of 2019, we managed to make this dream come true and we are very happy to benefit everyone involved in the process with a solution that facilitate the sending of remittances and reduce costs.
Cross border payments with cryptocurrencies are revolutionizing the way people access their money and our contribution to remittances is a much user-friendly, fast and cost efficient product that people can use in their day to day. Through ODL, by receiving the funds instantly, the need for pre-funded accounts in the destination country is eliminated and the risk of exchange rate volatility is reduced. This, added to the fact that it eliminates intermediaries and that the entire process is automated, results in lower costs in sending money.
As more people and businesses learn about this technology and experience making payments and sending money directly to each other, no matter where they are in the world, adoption will continue to grow rapidly
On average, sending a remittance from the United States to Latin America costs around 6% and to Mexico costs between 3% and 5%, depending on the amount to be sent and the method used. With the ODL system, costs can be reduced between 50% and 70%.
Full Name: José Pablo González Delezé
Role: Co Founder & Chief Design Officer
Full Name: Daniel Vogel
CEO Interview: https://www.youtube.com/watch?v=0_oSbd1GMb4