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| Elizabeth Rossiello, CEO BitPesa |
An online upcoming Kenyan start-up, BitPesa, belives it can challenge Western Union and MoneyGram in the area of remittances in Africa.
In a recent interview with Bloomberg, the CEO Elizabeth Rossiello, says it will use Bitcoin virtual currency model to cut transaction costs for Kenyans working abroad who send home $1.2 billion a year.
The online service plans to start on a trial basis by March, after obtaining regulatory approval, and gain 1% market share within a year by handling 6,500 transactions a month
Bitcoin is an open source peer-to-peer electronic money and payment network introduced in 2008 by pseudonymous developer “Satoshi Nakamoto”. Bitcoin has been called a cryptocurrency because it uses cryptography to secure transactions. Digitally signed payment messages are broadcast to and verified by a decentralized network. Specialized computers use a proof-of-work system to prevent double-spending, a problem for digital currencies.
Bitcoin gained credibility this month after law enforcement and securities agencies said in U.S. Senate hearings that it could be a legitimate means of exchange.
“There are no other market entrants trying to solve the problem of the very high cost of remittances in Africa,” Rossiello said.
Rossiello also stated that BitPesa was in talks to partner with two Kenyan commercial banks, and it’s also considering working with at least one telecommunications company and one money-transfer agent.
Under the model developed by BitPesa, the sender will use an Internet-based service to make payments and the funds will be traded into Bitcoins. BitPesa will then convert the virtual money back into a conventional currency at a competitive exchange rate for withdrawal by recipients through either their mobile phones or a bank account, said Rossiello.
