As banks cut cross-border transfer services to emerging markets because of perceived risk, the market for remittance services opens up for digital payments startups.
Some newer entrants are using decentralized cryptocurrencies, which enable more efficient, low cost transfer. Even though the regulatory environment for cryptocurrencies is unclear, the upstart companies are making headway in building a network of global payment services which allow for the transfer of money across borders.
Recently, alternative payments provider, ZipZap added new Latin American nations—Chile, Mexico, Colombia, Argentina, Peru and Uruguay—to its network of locations that allow users to deposit cash for Bitcoin. The company is expanding its cash-in/cash-out feature to create a global money transfer and bill payment network at a lower cost than legacy remitters such as Western Union, says Alan Safahi, CEO of ZipZap. In the future, consumers “may not know they’re using Bitcoin or any digital currency behind the scenes,” he says.
ZipZap has also partnered with several institutions in the U.K. to offer its services. But Latin America is an important market for the provider. “There’s a large percentage of unbanked people there…and there’s a lot of distrust of governments and financial institutions,” Safahi says. “The market is right for the rise of digital currency; people are looking for alternative options to their local currency that’s maybe less volatile.”