A new partnership will allow banks to make cross-border payments on the Bitcoin blockchain.
Crypto exchange Bitex and Bantotal, one of the biggest banking providers in Latin America, are launching the initiative.
Bitex will serve as a crypto bridge for financial institutions, as it allows them to convert payments made in fiat currencies to Bitcoin, and then back to fiat. By using Bitex’s services, users are able to complete transactions without having to perform several fiat-to-fiat conversions.
Manuel Beaudroit, Bitex’s chief marketing officer, tells CoinDesk,
“If I want to do a payment from Argentina to Chile, I don’t need to buy dollars with the Argentinian pesos then transfer the dollars to the U.S. then move the dollars to Chile and exchange them into Chilean pesos. I can just send a payment from Argentina to Chile directly [using Bitcoin]…
The integration of Bitex into Bantotal program represents a major step in the breakthrough of blockchain technology in banking.”
Says Sebastián Olivera, founder of the Uruguayan Fintech Chamber,
“Bantotal is one of the biggest banking providers in Latin America and is a huge player not just in Latin American but the greater Pacific… Bitex provides a great solution for payments and they will be boosted by the structure and name of Bantotal.”
The partnership will have a wide reach as Bantotal provides financial services to more than 60 institutions in 14 different countries. Approximately 20 million Latin Americans use Bantotal’s money management solutions, according to one of the firm’s representatives.
Bitex says they can leverage Bitcoin to drastically reduce cross-border transaction fees and settlement times, with local banks paying only one-fifth of the cost of a traditional bank wire.
Vice president of non-profit Bitcoin Argentina Leo Elduayen says the process is designed to be seamless for the end-user.
“The purchase and [transfer] of Bitcoin, Bitex does it all on your behalf. You as a user just send the money and Bitex takes care of the rest for you.”
As developers move to create a blockchain-based financial system that is more inclusive, transparent, fast, efficient and more affordable, a number of new solutions are focusing on remittances and cross-border payments.
San Francisco-based Ripple offers a suite of financial products that allow institutions to settle transactions significantly faster than banks. Ripple’s uses XRP, the world’s third-largest cryptocurrency by market capitalization, in its xRapid solution as a liquidity vehicle for cross-border payments, enabling financial institutions to circumvent the corresponding banking system by converting USD to XRP to a local currency in seconds instead of days.
The developers of Stellar (XLM) also offer a distributed ledger-powered international payments network that can settle transactions quickly and cheaply. Stellar’s platform is designed to connect banks, payments systems and people to move money quickly and at almost no cost.
Among traditional banks attempting to leverage the speed and efficiency of digital assets, JP Morgan Chase has become a front-runner with the introduction of JPM Coin.
The People’s Bank of China has also announced plans to launch its state-backed digital currency designed to speed up transactions by the end of the year.