Bitcoin airtime merchant, Bitrefill, has partnered with New York-based Bitcoin exchange Celery to enable bitcoin remittances of phone minutes to more than 100 countries – without the sender ever having to touch the digital currency.
“The integration uses all of the benefits of Bitcoin but hides the complexities from the user, just uses Bitcoin as settlement rails,” said Celery CEO IIya Subkhankulov.
The process does not require a user to buy bitcoin or handle the digital currency. Airtime purchases made from Celery’s exchange take the money straight from the person’s bank account, similar to the process of buying bitcoin.
In addition, Bitrefill is eliminating fees for airtime remittances to India. The U.S.-India corridor contributes largely to the $70 billion worth of remittances that flow into the Asian country each year.
A Proven Model
Ismail Ahmed, founder and CEO of WorldRemit, told Mobile World Live in 2014, that informal airtime remittances could make nearly half of the $40 billion worth of remittances that flow into Africa each year.
Ahmed made that comment shortly after raising $40 million from Accel Partners and others in a Series A Round, so his money transfer company could pursue airtime and other remittance services.
Airtime remittances are particularly valuable for people sending amounts of money worth under $20. According to TransferTo‘s CEO Eric Barbier, that’s the “sweet spot” for the unconventional money transfer. Remittance companies charge too much to make remittances of such a small amount possible, but airtime services’ low fees make it a viable option.
In many parts of the world, airtime minutes are not only serving as an informal money transfer system, but also as actual money. According to the Economist, in places such as Haiti, Zimbabwe and Egypt, airtime minutes are used to buy things such as gasoline, water and electricity.
According to Hannes Van Rensburg, Visa’s head of their sub-Saharan Africa division, airtime as money is particularly popular in countries where rigid regulatory schemes have made it very difficult for banks to offer new kinds of electronic money.
Even places such as Kenya, where mobile money such as M-Pesa is extremely popular, airtime as money has found a use case. Airtime minutes’ relatively stable price serves as a better store of value than the Kenyan shilling, causing people to hold airtime minutes rather than shillings.
Bitcoin’s UX Problem
A lot has been said about how non-user-friendly bitcoin can be, but according to Bitrefill CEO and co-founder, Sergej Kotliar, it’s really bad. During an interview with Bitcoin Magazine, Kotliar said users in many countries remain confused how to use bitcoin when paying for Bitrefill’s service.
“They had to be walked, step by step, through the process,” he said.
The partnership with Celery will allow users to take advantage of Bitrefill’s cheaper rates and convenience, while never having to touch the rather confusing digital currency.
After signing in, Celery users will see a “Phone Refill” feature toward the bottom of the screen. The user then chooses the amount he or she wants and clicks “Purchase.” The same amount is deducted from the customer’s bank account by Celery, which sends the order for airtime minutes to Bitrefill. The recipient receives the airtime a few seconds later.
But overcoming Bitcoin’s UX problem is just one of the steps the company is taking to reach its grander goal.
“We want to connect the worlds of prepaid and bitcoin. For bitcoin to be used by developing countries, they need to be able to spend it,” said Kotliar. “You can’t exchange bitcoin easily in the developing world, but you can spend airtime easily.”
“As Westerners, we didn’t realize how much of the world used prepaid phones. It’s actually the way the majority of the world receives their phone minutes and data,” said Kotliar.
Bitrefill launched in October as a side product for its two co-founders, Kotliar and Aleksandra Derikonja. But a month after launching the service, the company received a lot of interest from the press and, subsequently, from users.
That provoked Kotliar and Derikonja to think more deeply about the prospects of bitcoin in the prepaid airtime industry. After researching the industry more, they discovered that a bitcoin-powered airtime service could solve issues of convenience, price and more.
Bitrefill is headquartered in San Mateo, California, as part of the Bitcoin startup accelerator program Boost VC. They are using the opportunity to further develop their business and to network with other Bitcoin companies.
In the upcoming year, the company will be signing deals with exchanges in Europe and then other parts of the globe. They wish to bring the same “bitcoin-in-the-background experience” to more countries around the world.
The Bitcoin airtime merchant also will be releasing an API that will allow any Bitcoin business to integrate Bitrefill into its website.