Bridge21, the startup in Mexico, is aiming to use bitcoin to send money internationally to Mexico.
According to a report in American Banker, bridge21 lets users with a bank account in the U.S. send money to a Mexican bank account. Money is withdrawn from the user’s account and used to purchase bitcoin. The bitcoin is sent to Mexico, where it is then sold for pesos, which are then deposited in the bank account getting the money in Mexico. The entire transaction takes minutes after a single confirmation from the bitcoin network, noted the report.
“Our rates are based on the price of digital cash in the sending and receiving countries, not the bank exchange rates used by everyone else,” Will Madden, bridge21’s founder and CEO, said in a news release, according to the report. “This means we can often send money at rates no other money transfer company or bank can offer.”
Bridge21 said it can typically send money to Mexico for 2 or even 5 percent less than the mid-market rate.
The report noted the service comes at a time when President Donald Trump has said he would take a portion of Mexican remittances to cover the cost of his border wall and while bitcoin is facing a technical debate about how to grow the network, which may result in bitcoin splitting into two competing digital currencies, noted the report.
Nevertheless, the problem bridge21 wants to solve is a real one. Sending money is costly for the poorest people who are often hit with high fees. The report noted migrants from Sub-Saharan Africa pay a higher rate to send money home than anyone else in the world.
Bitcoin is attractive because it can be sent anywhere in the world without the need for a third party such as bridge21, but the need for a middleman comes into play once the digital currency arrives in the country and that is where bridge21 sees an opportunity, noted the report.