Denver-based bitcoin remittance startup bridge21 announced that it has added 38 new banks to its partner bank roster to enable more U.S.-based individuals to make international money transfers from the U.S. to Mexico.
bridge21’s new banking partners include Bank of America, Citibank, Chase, Fidelity, SunTrust Bank, TD Bank and Wells Fargo, among others. The new additions increased the startup’s partner bank network to 58 banks and credit unions in the U.S.
To provide its low-cost cross-border payment service, bridge21 leverages bitcoin to process the money transfers, while its customers deal purely in fiat currency. That means that users will decide on the amount of U.S. dollars they want to send to Mexico or the amount of Mexican pesos they want their recipients to receive. Once the user has agreed to the conversion rate and has initiated the transfer on bridge21’s platform, the startup then buys bitcoin in the U.S. with dollars and sells them for pesos in Mexico.
Also, as bridge21 uses bitcoin instead of the banking network to conduct its cross-border payments, it can do so at a much lower cost which results in better exchange rates for its customers and a 1 percent fee per money transfer. According to the startup, bridge21 manages to provide savings of over 5 percent compared to their competition.
“Last week we consistently offered 14 percent better than mid-market rates for large amounts,” said Will Madden, bridge21’s founder and CEO, in statement on June 1, 2017.
Since the launch of its U.S. to Mexico money transfer service, bridge21 has integrated BitGo Instant to increase the turnaround time of its transactions.
The “Trump Boost” for U.S.-Mexico Remittances
In light of President Trump’s plans to build a border wall between the U.S. and Mexico and his suggestion to fund the wall by heavily taxing or fully prohibiting U.S.-to-Mexico cross-border payments to keep the necessary funds in the country, money transfer operations have witnessed a sharp increase in U.S. to Mexico remittances.
A record number of money transfers have been conducted from the U.S. to Mexico between late 2016 and early 2017 in anticipation of potential policy changes by the Trump Administration that could restrict the flow of money across the border. As U.S.-based Mexican migrant workers send around $26 billion a year back home to their families, it is an important source of income for the Mexican economy.
The recent surge in U.S.-to-Mexico remittances, combined with an increasing demand for low-cost money transfer options, should bode well for bridge21 and other bitcoin remittance startups that are looking to service this economically important remittance pathway.
On the Horizon for bridge21
Madden told Bitcoin Magazine that the next step for bridge21 will be in remittances from Mexico to the U.S “going in the other direction, assuming we can tackle some regulatory challenges. Customers are demanding it and the total addressable market is enormous, nearly $300 billion annually. Also, when our Bridge Rate is bad in one direction it is good in the other. This means we can take full advantage of our Mexico rail without much work.”
Outside of Mexico, Madden is eyeing remittances between the United Kingdom and the U.S in both directions. “The U.K. Department for International Trade has opened a lot of doors for us and helped us to make the inroads necessary to expand there quickly and efficiently. We feel that the U.K. is very accommodating to financial technology companies. There’s a huge opportunity to connect the U.S. and U.K. banking systems with bitcoin.”
Aside from Mexico and the U.K., bridge21 is also planning to target large remittance markets in Asia and wants to expand into Europe and South America.
“Also on the list in no particular order are the Philippines, India, the EU and more countries throughout the Americas. China is a massive opportunity, but we’re not jumping in head first. We piloted there earlier in the year but backed out. There is too much regulatory uncertainty and the market is saturated. Japan is on our watch list,” Madden added.