African Migrant Workers Turn To Bitcoin For Cheaper Money Transfer

African Migrant Workers Turn To Bitcoin For Cheaper Money Transfer

in Independent, BBC, Guardian,

A shortage of payment options in Africa is driving bitcoin use among migrant workers, according to BitPesa CEO Elizabeth Rossiello, BBC reports.

BitPesa allows bitcoins to be transferred to Kenya and Ghana for a flat fee of 3 percent, and the company’s user base is growing by 60 percent a month, Rossiello, said.

Africans living abroad pay an average of 12.3 percent in remittance fees, according to figures by the Overseas Development Institute, so a 3 percent fee is a much better deal, the Independent reports. Total annual fees for remittances amount to $1.4 billion, according to ODI.

Africa’s history with mobile money services makes it fertile ground for bitcoin, according to the Independent. Users pay for goods with mobile phones instead of cash or credit cards. In Kenya, mobile money service M-Pesa is so ubiquitous that almost 70 percent of all payments is made through the service.

Lack of competition could help keep the remittance fees high, BBC reports. Digital currency of bitcoin could help with that. Less than 3 percent of the population have credit cards in some parts of sub-Saharan Africa. Western Union and MoneyGram have 50 percent of the remittance market. PayPal is not widespread and can also be expensive, the Independent reports. Bank transfers can be two the three times more expensive.

You can do just about any financial transaction on MPesa and “you can do it on the most basic of cell phones because Africa isn’t a smart phone continent yet,” tech reporter Toby Shapshak told the Guardian.

Bitcoin is on the rise but liquidity, transparency and volatility remain problems. Remittance companies say they combat this by immediately converting transfers. The record does not show the identity of users, and anonymity is a headache for law enforcement authorities.

“The anonymity makes it an attractive proposition for criminals to use in terms of hiding the money trail we would use to get evidence against them,” said Terence Chua, Singapore’s deputy public prosecutor, in an interview in the Guardian, Independent reports.

In terms of the need for a fast, cheap alternative form of payment, bitcoin does have a greater opportunity in sub-Saharan Africa, Rossiello said, according to BBC.