Policymakers can do much more to maximize the positive impact of remittances by making them less costly and more productive for both the individual and the recipient country. –Dilip Ratha, Manager of the Migration and Remittances Team at the World Bank’s Development Prospects Group
By Mark Norton 7/17/2014
Dilip Ratha is right. According to the World Bank, 410 billion dollars was remitted from around the world to the home countries of people living and working around the world. The average cost for sending that money across international borders was 5-20 percent with a global average of 9 percent. Remittances, often enough, are used as a way for people to support their families back home and can be an incredible boon to local economies. Looking at the 5-20 percent spread quoted above, it’s not hard to guess what kind of people get the 5 percent rate and who the 20. Finding a way to lower that rate would be god-send to many hard-working people who found they had to make the hard choice to move far away to take care of their families.
One country that benefits a lot from remittances is the Philippines, which last year was the recipient of over 26 billion dollars. This, along with the high rate of cellphone usage, makes the Philippines a strong candidate for widespread Bitcoin adoption. Satoshi Citadel Industries (SCI), which was formed only in May of this year, is working hard to take advantage of that opportunity.
Starting only April of this year, they have already created four business, Rebit.ph, an easy-to-use remittance service, Bitmarket.ph, the BitPay of the Philippines, Coinage.ph, a peso exchange currently in Beta, and Bitstars.ph, a social networking site that lets users post selfies to get votes that will make them eligible to win bitcoins. By creating all these services all at once, SCI is positioning itself to be the complete Bitcoin service – social networking to build familiarity and popularity, remittances and merchant acceptance to build usefulness, and an exchange to build liquidity.
I was able to get in touch with SCI’s Head of Product, Luis Buenaventura who answered some of my questions.
You folks seem to be investing a lot of time, energy and money into ramping up Bitcoin businesses. That suggests that you think the Bitcoin could really go big in the Philippines. What makes you think the Philippines are a good bet for Bitcoin becoming widely adopted?
We think that Bitcoin has a potential to make a bigger impact in countries where the local currency is weak and inflation is high. 10M Filipinos live and work overseas, and because of this almost 10% of our GDP is generated purely from incoming remittances (about $30B in 2013). The Philippine economy is doing poorly, but we have 70% mobile phone penetration, and are one of the highest in terms of social-network usage in the world. This is exactly the kind of environment where a ”better kind of money” could have a huge, viral effect, with each new Bitcoin user just naturally influencing one or more of their friends and family to try it out.
In an article that appeared on CoinTelegraph, it says that your BitPay-like company BitMarket.ph has 70 merchants signed up with another 30 pending. Have you made any more progress since then?
We’re close to a hundred now and continue to sign up new ones every day. The most exciting part is that we’re starting to get noticed by the really big retailers too, which would go a long way towards legitimizing our platform.
In terms of remittances, the fact that the Philippines have much looser laws regarding money transfer, AML and KYC than other countries, coupled with the 5-20 percent fees fiat remittance services like Western Union collect, would seem to make Bitcoin a no-brainer for people. How do most people on the street respond when you tell them about it?
It’s arguable whether the Philippines’ AMLA and KYC laws are looser than other countries.’ Remittance businesses here say that we’re one of the strictest in the world, which seems counter-intuitive since the citizenry sorely needs the incoming funds.
Our Bitcoin money transfer app, Rebit.ph, charges a relatively svelte 1% fee per transaction, and we’ve gotten quite a few early-adopters already since we launched it earlier this month. I don’t think there’s any argument that this is fulfilling a serious need; the challenge is really just for our business to be able to handle the incoming BTC without breaking the bank (perhaps literally).
How do you overcome their fear of the new and technological?
By being fun and engaging, primarily. Our Bitcoin faucet, BitStars.ph, is pretty good at this. It’s a selfie contest site where the daily winner receives their cash prize in Bitcoin. They have to create a Bitcoin wallet in order to receive the prize, and there’s no better motivator for learning a new technology than the idea that there’s money waiting for you when you do.
I’ve visited the Philippines myself and one of the things that really struck me was the massive wealth disparity. How do you think that Bitcoin is going to impact Filipino society? What do you think are the biggest friction or danger areas?
Well, our goal is to give people better financial tools that will allow them to optimize the few resources that they have. I personally have no illusions of how difficult the task that we’ve put forth for ourselves is, but there’s historical proof that technology can enable these massive sea changes in a very short period of time. In the same way that the Internet itself has shrunk the knowledge and information disparity, Bitcoin has the potential to do the same for the financial arena. We just need to make the tech easier and simpler to use.
Obviously, we’ll get pushback from traditional finance, but one could argue that if we didn’t, then we’re probably not doing it right.
I also see a competitor remittance service called SendMoney.ph is gearing up. What distinguishes you from them?
We’ve got a much more capable team, IMHO. Our founders, our managers, and our engineers all have decades of experience doing what they do (in both traditional and startup business settings), and that wealth of knowledge and experience shows in the products that we release. Case in point: we kicked off in May 2014, and we’ve already got 4 distinct, standalone brands in market.
I see that the central bank of the Philippines came out with a warning about Bitcoin in March. It’s fairly similar to warnings we’ve seen from other central banks around the world. How do you foresee the regulatory environment developing in the Philippines?
This is a big question mark for the local Bitcoin community, and one that we’re working hard to sort out. Andreas Antonopoulos said quite recently that he was strongly opposed to regulation because it historically has never worked, but we’ll see how things go. Our best-case scenario is of course that Bitcoin will receive the government’s consent, if not support, and we won’t have to worry about getting legislated out of existence.