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Wellington Ayugi

5 Bitcoin Remittance Services Africans Can Use

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In the past, the international remittances market has been dominated by large money transfer operators such as MoneyGram and Western Union. However, that has begun to change with the entry of bitcoin startups that are evening the playing field. With the rise of cryptocurrencies and the blockchain, companies are now embracing bitcoin and blockchain technology to improve international remittance services.

In this post, you will discover five bitcoin remittance services that are disrupting the status quo of international money transfers in Africa.

Abra

AbraAbra is an app that uses peer-to-peer technology where the money being transferred goes directly to the recipient with no middlemen involved. Users are able to store money in their mobile wallets through debit cards or an Abra teller.

In addition, the user does not require a bank account to sign up for the service, and he/she can transfer money from his mobile device to countries like Morroco, Gambia, Malawi just to name a few. Using Abra, sending and receiving money is free and you can use the app to buy bitcoin directly. You can check which features of Abra’s app are available in your country here.

BitPesa

BitPesaBitPesa allows entrepreneurs in Africa to make cross-border FX payments. Nairobi-headquartered BitPesa provides a platform for African businesses to send and receive international payments using bitcoin as the in-between currency to lower transaction costs, thus reducing users reliance on slow and expensive bank legacy systems.

In addition, the exchange of African currencies with other international currencies makes it a better alternative to the US dollar as a benchmark currency for foreign exchange.

BitSpark

Hong Kong-based BitSpark has created an end-to-end international money transfer platform that uses blockchain technology to facilitate transactions. The company has recently expanded its services to Nigeria, one of the largest remittance markets in the world with $21 billion in remittances received each year.

BitSparkBitSpark new remittance channel into Nigeria will be 14.4% cheaper than its competitors, thereby offering an excellent blockchain-based alternative to MoneyGram and Western Union for Nigerians.

Remitano

Remitano provides an escrowed peer-to-peer bitcoin marketplace where people can trade bitcoin easily and securely. The platform has a simple user interface and offers many payment methods to make bitcoin purchases. Remitano allows you to deposit and withdraw fiat money from almost anywhere in the world.

RemitanoWhat makes Remitano an easy-to-use bitcoin remittance service is that once users receive bitcoin on their Remitano wallets, they can easily convert them into local currency on the peer-to-peer exchange itself.

GeoPay

GeoPayGeopay is a South African peer-to-peer remittance service that runs on the blockchain and enables people living abroad to remit money across borders. Unlike normal banking systems, the company does not require documentation to facilitate cross-border money transfers.

In addition, there is no bank account involved when sending and receiving money. Withdrawals are made from a network of agents, making it the perfect platform for micro-transactions in different parts of Africa. With a 3 percent transfer fee, the company seeks to offer an affordable option to traditional money transfer services like MoneyGram.

Remittances play a big role in the economies of African countries. However, migrant workers sending money home have had to put up with expensive transfer fees from traditional remittance services. Bitcoin and the blockchain are improving this by lowering the transaction fees and increasing the speed of remittances. There is no doubt this is just the beginning for blockchain-powered remittances in Africa and it will be interesting to see what role they will play in the future.

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The Kenyan Central Bank is Hampering Bitcoin Adoption in Kenya

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The bitcoin space in Kenya is among the most vibrant in Africa with the capital Nairobi being home to a number of innovative bitcoin startups. This is partly due to a growing bitcoin community, the rise of a local fintech industry, and upgrades to the country’s infrastructure. However, bitcoin adoption in Kenya is being hampered by the regulatory climate in the country that is being negatively influenced by a bitcoin-unfriendly central bank.

The Central Bank Issued a Warning about Digital Currencies

Back in 2015, the Central Bank of Kenya (CBK) issued a statement that warned against the use of bitcoin saying it was not a legal tender and could be used as a conduit for money laundering and terrorism financing.

A number of people in the Kenyan bitcoin space voiced their dissatisfaction with the announcement. Speaking to CoinTelegraph, Kenyan bitcoin thought leader and CEO of Umati Blockchain Ltd, Mic Kimani, stated,

“The accusations are a bit over the top. The Central Bank got some things wrong in its notice, like casting a wide blanket warning against virtual currencies, yet here in Kenya, we already have a lot of virtual currencies in use like Bonga points, and electricity tokens.”

The CBK further instructed local banks not to provide bank accounts to bitcoin startups. One such company was bitcoin payment processor, BitPesa which had its bank accounts shut down. The bitcoin startup that is headquartered in Nairobi has found it difficult to operate in the country due to the position taken by the CBK.

Bitcoin Startups Face Challenges in Kenya

Recently, BitPesa announced that it has been forced to retreat from the Kenyan market. Due to the CBK directive, bitcoin-related businesses are unable to open or maintain accounts with local banks. As a result processing payments in Kenyan shillings has become impossible for the startup and it has opted to halt the verification of new users.

South African bitcoin exchange and wallet provider Luno, has also stopped offering its bitcoin exchange service in the country and can currently only be used as a bitcoin wallet in Kenya.

BitPesa CEO, Elizabeth Rossiello stated in Disrupt Africa,

“While BitPesa is still a tax-paying, registered Kenyan company with a large office for its finance, trading, customer support and sales functions for the region, it is blocked from servicing Kenyan customers. This is a total shame, given that the company and the African bitcoin boom it started when it launched, began in Kenya.”

According to Rossiello, the CBK made the move to restrict BitPesa and other similar startups without consulting relevant stakeholders and without any type of in-depth research. She also maintained the position taken by CBK is in stark contrast to local bitcoin users and investors, who are largely infatuated with bitcoin startups. The actions of the regulator have impeded the growth of the company locally at a time when it was experiencing a significant bump in trading volumes across its other six African markets.

Little Progress by Way of Dialogue

A recent report by Disrupt Africa titled Finnovating for Africa showed how attractive cryptocurrency startups and blockchain technology are to investors, especially since they can develop cheap, efficient and secure products for customers who need them. These technologies have the potential to solve many challenges in financial services, record keeping, and identity management just to name a few.

Therefore, it is important for bitcoin and blockchain startups to actively engage regulators and local financial players. In the case of BitPesa, conversations with the CBK, however, are yet to yield any positive results.

“We have been working closely with the Nigerian Central Bank and have a great dialogue with other Central Banks in East, Central and West Africa, but we have still made little progress in Kenya, which remains the strictest jurisdiction in Africa, having gone out of its way to ban any bank from banking or partnering with companies using this technology,” Rossiello said.

It is worth noting that major global institutions such as the World Bank and IMF, and central banks of leading economies are publishing white papers on bitcoin and are softening their regulations to allow bitcoin startups to grow compliantly. It would be wise for the CBK to reconsider its stance since it impedes local companies from entering the bitcoin space and competing against international players. It remains to be seen if the CBK will adopt a more open approach towards cryptocurrency innovation but, for now, the situation looks rather unfavourable for Kenyan bitcoin startups.

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