Companies and services using Bitcoin are poised to rise to the top of the US to Mexico remittance industry, Mexico's second largest industry. Many experts stated in an interview with Cointelegraph that the market has huge potential to make cross-border money transfers simpler and cheaper which will save millions of dollars for Mexican people and the economy.
The remittance corridor between the USA and Mexico is currently the biggest and most competitive in the world attracting more and more remittance providers every year. Remittances sent to Mexico from the United States by emigrants totaled $20.69 billion in the first 10 months of 2015. Immigrants traditionally use transfer services like Western Union, which can cost almost 7% of the transfer amount. Utilizing Bitcoin instead can significantly cut down on transaction costs.
Susanne Tarkowski Tempelhof, founder and CEO of Bitnation, sees promise in the future of Bitcoin remittance services:
“I believe it will be the end of the remittance industry as we know it. Old companies like Western Union won't be competitive. Perhaps new ones will emerge like we've seen in some countries in Sub-Saharan Africa and South-East Asia, where they've [sic] themed up with mobile phone operators, so the remittance recipient can get cash in the local currency at local mobile shops or top-up stations.”
Problems
José Rodríguez, VP of Payments for Mexican Bitcoin exchange Bitso, sees potential in the Bitcoin remittance market, with the biggest obstacle to growth being education, information, and having user-friendly applications:
“We have participated in events hosted by banks or financial institutions, and spoken with their teams and heads, and there is interest and will to learn more. Companies like [remote bill-paying service] Saldo do, and are very active on education and customer acquisition. On our side we are more on their backend but we have had some approaches with immigration associations.”
Another problem is that Mexico has very strict AML regulations and high penalties for non-compliance because of the drug trade. It can make startups’ work in the country more complicated. Nevertheless, it doesn’t stop remittance companies from conquering the market as it is, perhaps, the biggest one in the world. 35 million people living in the USA claim a full or partial Mexican ancestry, and another 7 million are unauthorized immigrants from Mexico.
Another problem may be caused by the US government as they realize the amount of money which flows out of the country’s economy due to the ease of such remittances. According to the American Real Estate mogul and presidential candidate Donald Trump, the country loses billions of dollars from illegal immigrants’ money transfers. That’s why he offers an immigration plan which involves the increase of fees. Cointelegraph has covered this issue earlier. Trump stated:
“Mexico continues to make billions on not only our bad trade deals but also relies heavily on the billions of dollars in Remittances sent from illegal immigrants in the United States back to Mexico (US$22 billion in 2013 alone) […] Mexico must pay for the wall and, until they do, the United States will, among other things: impound all remittance payments derived from illegal wages.”
Good News
Good news for the growth potential of the Bitcoin remittance industry from the United States to Mexico: Hispanic Americans poll as the ethnic group most likely to have heard about Bitcoin.
José Rodríguez sees more potential in using the traditional ATM banking network for withdrawal and working with banks on automation and integration than building up a bitcoin ATM network in Mexico, noting that “the mexican network of Bitcoin ATMs isn’t as big, around 10 in the whole country.”
Eric Grill, CEO of CoinOutlet, “would love to operate Bitcoin ATM's in Mexico,” noting that the Texas-Mexico corridor is the largest remittance corridor in the world:
“We haven't focused on Mexico yet. Regulations would be different in Mexico and we are geared towards US Compliance for now. We would like to operate in Mexico in the coming year.”