But that may be about to change. The Kenya-based BitPesa service enters into beta testing this week, offering traditional remittance services for a fraction of the double-digit fees most Kenyans currently pay. For humble 3% fee, Nairobi-based startup will receive and convert bitcoin to Kenyan shillings (KES) and deliver it to a local recipient’s M-Pesa mobile account within minutes.
Although this does represent a huge step forward for the $1.17 billion remittance market in Kenya, the BitPesa system does have a few kinks to be worked out. The party sending the money must already have a bitcoin supply, for instance, adding additional delays and fees to the process. While M-Pesa is extremely popular in Kenya, and arguably the most developed mobile payment system in the world, it has many substantial fees of its own, effectively raising the remittance rate.
Considering that a native bitcoin transfer wouldn’t even have BitPesa’s 3% fee, and can be sent to the same mobile devices and theoretically withdrawn at a low-cost bitcoin ATM or accepted directly by bitcoin-friendly merchant, BitPesa’s approach might be little more than an intermediary technology. That said, bitcoin ATMs and merchant services are still a long ways off for most of Africa, and the remittance problem in the continent is huge. Assuming the fee structure offers real competition to the current model, BitPesa’s greatest value might simply be in disrupting the iron grip Western Union and Moneygram have on the continent.
BitPesa’s service is currently available for Europe-to-Kenya transfers, with a maximum transaction of £750 for new users and up to £10,000 after identity verification. Larger transfers are possible, but require BitPesa approval.