MICROCAPITAL BRIEF: Kenya’s BitPesa to Expand Mobile Remittance Services to Tanzania

BitPesa, a Kenyan startup that uses bitcoin to offer mobile phone-based remittances at a fee of 3-percent, has expanded its business model to Tanzania. While the region’s average remittance cost was 11.89 percent, according to a 2013 World Bank report, the BitPesa fee does not reflect exchange rate margins, which can significantly affect the total cost of remittances.

Users from most countries can use BitPesa to send money to Kenya and Tanzania by first acquiring bitcoin, a digital currency that can be bought through third-party service providers. Recipients access the remittances, which arrive in local currency, via a mobile phone-based electronic wallet.

“The bitcoin technology is in the cloud, which means that everyone has access to world-class infrastructures,” said BitPesa CEO Elizabeth Rossiello. In its first year of operations, BitPesa raised USD 1.8 million from international investors, the largest of which was US-based Pantera Capital.

Bitcoin is a digital form of currency based on a peer-to-peer payment network. Created in 2008, it is known as a “cryptocurrency”, because it uses cryptography to secure and control its transactions, and has no central governing authority.

By Mathew Cerf, Research Associate

About Bitcoin

Bitcoin is a digital form of currency based on a peer-to-peer payment network. Created in 2008, it is known as a “cryptocurrency”, because it uses cryptography to secure and control its transactions, and has no central governing authority. The value of bitcoin reached a high of USD 979.45 on November 25, 2013, and was valued at USD 219.40 as of April 27, 2015. As of April 2015, there are 14.1 million bitcoins in circulation. Although bitcoins continue to be “mined”, only 21 million bitcoins will ever exist.

About BitPesa

BitPesa is a Kenya-based mobile money firm that allows individuals and businesses to send money between Kenya and Tanzania and to and from those countries to most others in the world. It uses Bitcoin transfers to facilitate disbursement in Kenyan and Tanzanian shillings. The company charges a 3-percent transaction fee which does not reflect exchange rate margins, which can significantly affect the total cost of remittances. The company allows a maximum transfer of KSH 70,000 (USD 717) per transaction. Founded in 2014; in its first year of operations, BitPesa has raised USD 1.8 million from international investors.

Sources and Additional Resources

[1] VentureBurn, “Kenya’s million dollar bitcoin startup BitPesa expands to Tanzania, http://ventureburn.com/2015/05/bitpesa-expands-tanzania/

[2] World Bank Group, “Send Money Africa”, https://sendmoneyafrica.worldbank.org/sites/default/files/SendMoney_Africa_Remittances_Report_2013.pdf

[3] MicroCapital Story Brief, “MICROCAPITAL BRIEF: Money Transfer Startups Bitpesa, Igot leverage Bitcoin to Reduce Price of Remittances”, https://www.microcapital.org/microcapital-brief-money-transfer-startups-bitpesa-igot/

[4] Inside Bitcoins, “BitPesa Expands Bitcoin Remittance Services to Tanzania,” http://insidebitcoins.com/news/bitpesa-expands-bitcoin-remittance-service-to-tanzania/32655

[5] BitPesa, “FAQs”, https://www.bitpesa.co/faq

[6] The Wall Street Journal, “BitBeat: Kenya’s BitPesa Raises $1.1 million, Expands Operations” http://blogs.wsj.com/moneybeat/2015/02/09/bitbeat-kenyas-bitpesa-raises-1-1-million-expands-operations/

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