African Bitcoin startup BitPesa launched its remittance service in Tanzania today. The service previously was available only in Kenya, where the company is headquartered. It hopes to undercut the fees charged by incumbents’ remittance services.
BitPesa launched its international money transfer in Kenya last year with the goal of expanding the service to the rest of Africa, something the company has slowly been working toward. Besides its remittance product, the company operates an exchange in Kenya and Ghana but Tanzania is the first country the startup has expanded its international money transfer service into.
Like Kenya, Tanzania is a mobile money hotspot and an ideal country for BitPesa. The nation has a population of more than 43 million people, and, according to a2014 study by industry group Groupe Speciale Mobile Association (GSMA), has 31.8 million registered mobile money accounts. Tanzania received $317 million in remittances, $15 million of which came from Kenya, in 2012, according to a World Bank study.
BitPesa’s service allows anyone to send money to any Tanzanian phone number and charges a flat 3 percent on all its transfers. The service also promises the money will arrive instantly.
A Competitive Market
BitPesa will be joining a number of other companies that offer domestic (from city to rural) and international remittances in the country. Tanzania already has more than six mobile money operators who offer money transfer services to anyone in the country, and operators such as M-Pesa, who have partnered with Western Union, offer international mobile remittances.
Due to a lack of studies and research about remittance fees in Tanzania, it is unclear whether BitPesa will have a cost advantage, but it is certainly likely, especially for inter-Africa remittances. A 2013 World Bank press release said that Tanzania, alongside South Africa and Ghana, were the most expensive African countries to remit money to. Fees reportedly could get as high as 20 percent.
BitPesa’s low flat rate might turn out be an attractive option for Tanzanians in Kenya remitting money back home, which is a smaller corridor and usually has higher fees. The same might hold true for Tanzanians living in Uganda when the Bitcoin startup expands there later this year. The service will of course allow people from anywhere in the world (excluding the United States) to remit money to the small African country as well.
A more likely candidate for the service however, are businesses operating in Kenya, Tanzania and countries such as the United Kingdom, who have to send money to and from the African nation. BitPesa has already pivoted their service to better accommodate businesses’ needs after finding a large interest in the service from the group late last year.
Image via BitPesa.co.