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Send home your wages using Bitcoin and avoid hefty money transfer fees? That’s now a reality

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Coins.ph co-founder and CEO Ron Hose (right) chats with Josh Villanueva of Rappler.

On June 29, Philippines-based Bitcoin exchange Coins.ph launched its remittance service, SendMoney.ph.

The service targets the $24.7 billion market for remittances in the Philippines, which trails behind only China and India in volume. While this industry represents an additional and significant revenue opportunity for Coins.ph, its co-founder and CEO Ron Hose is also considering Filipinos working overseas – a large group of people dubbed overseas foreign workers (OFWs) – that SendMoney.ph may help.

“We saw overseas foreign workers paying anywhere from five percent to 25 percent to send money home with companies like Western Union and Moneygram,” Hose explains. “When their relative in the Philippines loses $10 on a $100 transaction, that’s equivalent to two to three days of work. We thought: with Bitcoin we can do it cheaper. We can solve a real pain.”

To that end, SendMoney.ph allows these overseas workers to send cash from anywhere in the world using Bitcoin and have their relatives in the Philippines get the money via a bank deposit (for no fee), door-to-door delivery (80 to 120 PhP fee, which is US$1.83 to $2.75), or via pick-up at one of their partner retail locations (50 PhP fee; US$1.15) in the Philippines.

See: The state of Bitcoin in Southeast Asia

The Skype effect

Bitcoin enthusiasts and pundits have long predicted that a user-friendly money transfer service would prove to be “Bitcoin’s killer app” or “Bitcoin’s holy grail” both in terms of Bitcoin adoption and the profits it would reap for startups involved. Will SendMoney.ph succeed on such a scale in the Philippines?

The early signs are promising. “We already had customers that were using our Bitcoin exchange informally to remit money by selling Bitcoin, so we knew there was demand,” Hose recalls.

The question then becomes: how much demand? How many Filipinos will be willing to send out a new kind of currency through a new exchange via a new remittance service?

Hose understands that the amount of Filipinos willing to take this chance may be small initially. “Bitcoin is very early technology, and it’s going to take time for it to gain trust and mainstream adoption,” he admits. “We know we are mostly working with early adopters, but the pain point is real, and so there is a lot of motivation for people to experiment.”

To encourage Filipinos to try out SendMoney.ph, Hose is focused on gaining their trust. That may sound like lip service coming from any other entrepreneur in any other industry, but in the cryptocurrency space, where scams pop up like wildflowers, it cannot be emphasized enough: companies live and die by their reputation.

Invoking his experience with Coins.ph, Hose says, “This is a trust-driven business – our growth has been primarily word-of-mouth so far. A lot of our customers try with a small amount first, and once they’ve had a positive experience, they tend to use it regularly and recommend the service to friends.”

Hose hopes the same trend will hold true for SendMoney.ph, especially as it provides not just a service to Filipinos, but a social good to the country. The truth is in the numbers: an estimated US$2 billion dollars is lost in money-sending fees every year. If SendMoney.ph can even recoup a fraction of that back to the Philippines – by way of the cheaper fees that are standardized between countries – it would give a serious boost to the nation’s economy.

“Our long-term mission at Coins.ph is to to improve financial inclusion in emerging markets. We’re using Bitcoin as a disruptive technology that reduces the costs of delivering financial services to end consumer,” adds Hose.

Hose cites Skype as a technology that improved lives for the same group of people:

A good example of that is the way Skype disrupted the long-distance calling market a decade ago by using VoIP to lower the cost of calling relatives. We think that Bitcoin will have the same ‘Skype effect’ on the remittances market.

Should Filipinos beware of Bitcoin?

Of course, as upbeat as the pronouncements are, and as hopeful as they will make any Filipino who wants to send home more of his or her wages, it’s important to ask why money-wiring service providers like Western Union or Moneygram are more expensive for overseas workers to use than SendMoney.ph. All companies, after all, whether a startup like Coins.ph or a massive corporation like Western Union, have bills to pay.

A critic might point out that Bitcoin-based services save on overheads due to their lack of regulatory compliance. Depending on who’s talking, that’s heralded as either Bitcoin’s strength or its possible downfall.

Traditional remittance services have to comply with the local and national regulations that govern the trade of fiat money. This requires, among other things, lawyers and compliance officers, additional protocols and safety measures. Bitcoin, on the other hand, is largely unregulated. In fact, the national bank of the Philippines, Bangko Sentral ng Pilipinas (BSP), did nothing more than issue an official warning against the use of Bitcoin, which carries about as much legal weight as a politician’s campaign promise.

They warn of many possibilities, including the fact that the “value of your virtual currencies cannot be guaranteed and can change quickly,” “virtual currencies in your digital wallet can get stolen,” and “virtual currencies may be used for money laundering and other illicit activities.”

Notably, the page-long proclamation does not once touch upon the potential of Bitcoin or other virtual currencies to help the Philippine economy.

Despite the government’s strictures, Hose remains positive about the future of the cryptocurrency in the country:

Filipinos, regardless of whether they’re here or working abroad, are extremely resourceful by nature, and they’re always looking for better, cheaper, quicker ways to solve problems.

Editing by Steven Millward

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