TOKYO -- A Kenya-based digital payment startup using blockchain technology is seeking to partner with more Asian companies and plans to open an office in the region next year.
The company, BitPesa, offers international payment services to companies, and it can execute transactions in as little as one hour. That quick turnaround means risk exposure due to exchange-rate fluctuations is reduced by about 65% annually, compared with the traditional way of wiring funds through banks. All transactions and related activities through BitPesa are done online.
The four-year-old startup's service works like this: A sender registers online and sends funds through local bank transfers or via electronic funds to BitPesa, whose team then purchases bitcoin and sends it to a receiving bank account in another country.
BitPesa's commissions are calculated into the exchange rates, similar to how exchange counters at airports operate. The company says its exchange rate is typically much more competitive than banks, and there are no additional fees. Pesa means "money" in Swahili.
BitPesa offers an alternative service in which it matches users in the same country. For example, if a sender and a receiver in China carry out transactions with companies in other countries, BitPesa pays the receiver in China from the funds it collects from the sender in China.
Most of the company's transactions are between customers in Europe and Africa, but "now we are seeing more between Africa and Asia," said Elizabeth Rossiello, BitPesa's chief executive and founder. As of March, about 10% of the transactions that the company handles, which is roughly $24 million, involve countries in Asia. Its platform is often used to pay fees to suppliers or to pay wages across regions.
The company has been expanding. In February, it announced the acquisition of TransferZero, an online transfer platform based in Spain, for an undisclosed amount. BitPesa is licensed as an authorized payment institution in Africa and Europe, providing compliance on behalf of its customers.
Africa is "a huge growth market" with an expanding middle class and the need for goods such as autos and electronics, Rossiello said. For Asian companies wanting to enter the market, BitPesa is "an easy way to start," she said. "Working with a licensed company like ours would reduce your currency risks, and manage your intra and external transaction."
Rossiello is looking to increase the number of companies entering new markets other than Africa and Europe. "Our teams are good at opening markets," she said, and are able to manage requirements and do the legal ground work, including documentation, tax clearance and import-export certificates in each country.
The company has offices in Kenya, Nigeria, Senegal, London and Luxembourg. Rossiello said there are plans to open offices in Abu Dhabi, and she also is looking to expand its operations in South and Central Asia, such as Pakistan and Kazakhstan, with "currency issues and transaction issues." There are greater risks when currencies are volatile, and options for sending money are limited when countries have a limited number of banks.
Rossiello, an American who previously worked as a consultant in microfinance, arrived in Kenya in 2009, when mobile currency was just taking off in the country.
At that time, M-Pesa -- launched by communications company Safaricom, the Kenyan affiliate of Vodafone -- only provided mobile money transfer services within the country. Rossiello wondered, "How do we take this system and make it global?"
Some recent high-profile thefts and tech glitches have cast a shadow over the cryptocurrency market. In January, about $530 million was stolen from virtual-currency exchange Coincheck, based in Tokyo. Japanese regulators later strengthened their grip on cryptocurrency exchanges.
In another incident in February, a system error at Osaka-based cryptocurrency exchange Zaif, operated by Tech Bureau, briefly allowed several customers to acquire cryptocurrencies without paying for them.
Despite these problems and the negative publicity surrounding such episodes, Rossiello believes that a hybrid of cryptocurrencies and traditional banking systems are useful.
"I see them as an infrastructure tool" when people cannot find the same bank in all markets, she said, while adding that there are risks and "you have to be very careful about how you use it," such as having a specialized staff to purchase bitcoin. "But if you ignore technology, you will lose."