Ghanaian startup Beam is banking on the fact heavily undercutting other remittance services will lead to large uptake of Bitcoin across Africa.
Beam, founded in October of last year, by Nikunj Handa and Falk Benke, was established based on the realisation of how many problems existed in the payments industry in Ghana.
An estimated three million Ghanaians live in the diaspora, with US$120 million remitted to the country in 2013 according to the World Bank. Remittance flows to and within Africa approach US$40 billion in total, but Beam believes the cost of remitting money is too high.
“We started looking into how using Bitcoins could solve these problems, ran a Bitcoin brokerage for a while, and finally settled on Beam,” Handa told Disrupt Africa.
The startup facilitates Bitcoin remittances to Ghana, allowing Ghanaians in the diaspora to send money home using the digital currency.
Handa said the price of remitting through Beam would prove attractive to users, with the company taking a three per cent commission on the remittance amount compared to an average of 12 per cent charged by competitors for remittances.
“We allow this at a fraction of the cost that our competitors do and send money directly to mobile money accounts, aiding convenience, transparency and financial inclusion within the country,” he said.
“We are a social enterprise and do not aim to maximise our profit at the expense of our users’ wellbeing. This is why we charge just three per cent. We believe that this an ethical amount to charge our customers while being able to achieve sustainability.”
Beam’s innovative solution and “ethical pricing” have won it plenty of friends. It has obtained incubation and funding from Ghana’s Meltwater Entrepreneurial School of Technology (MEST), while it also won a place at the Seedstars World global competition in Geneva, Switzerland.
In November, it launched Bitcoin Against Ebola, a website that allows Bitcoin holders globally to make donations using the cryptocurrency in support of ebola relief efforts in Sierra Leone. Beam converts the Bitcoin into Sierra Leonean leones and instantly deposits funds into a mobile money account through a partnership with Splash, Sierra Leone’s largest mobile money service.
Most important for the startup, however, is that the service is up and running in Ghana and already seeing usage and positive reviews.
“The uptake has been encouraging for a company that is just three months old,” said Handa. “We have barely done any marketing yet and people are already using and loving our service.”
Handa believes Bitcoin has a bright future in Africa, and says usage is increasing in South Africa, Kenya, Ghana and Nigeria, with the company planning to make the latter its first destination for expansion.
Though he admits there is a long way to go for Bitcoin in terms of merchant adoption and P2P usage in Africa, he said the opportunity is clear given the benefits of using the cryptocurrency.
“Bitcoin can be used as an excellent way for Africans to send and receive money from anyone, anywhere in the world. This can include both people and merchants,” he said.
“Merchants can use Bitcoin to cheaply accept payments from anyone in the world. People can participate in remittances. People all over the world can also participate in a global P2P lending market using Bitcoin.”
Handa also said the fact Africans are more used to the concept of digital payments and digital cash than people in other developing continents, which could ease the adoption of Bitcoin.
“With the right integration with the mobile money vendors and the mobile money software, the acquisition, liquidation and hedging of Bitcoin can be made seamless and easy for the African public to adopt,” he said.
Globally, concerns have been expressed over how secure Bitcoin is, but Handa said there are no known major issues with the protocol.
“Bitcoin is very secure, battle-tested and supports almost 100,000 transactions per day,” he said, though he advised individuals using Bitcoin to be careful in securing their assets from both hackers and price fluctuations.
“There are lots of amazing Bitcoin wallet services out there that make doing so very simple. Coinbase, Circle, Coinapult and CoinJar are some great examples of easy to use and safe services to help users protect their Bitcoin assets,” Handa said.
“Bitcoin itself is very secure. Its application in money transfer systems depends on the quality and security measures the company building the money transfer product adopts.
At Beam security is a top priority and we use reliable, battle-tested and open-sourced software to ensure that we are at the forefronts of security.”
One thing Handa says is necessary for the development of the cryptocurrency in Africa is the creation of fundamental Bitcoin infrastructure in each country, in the form of a Bitcoin brokerage or exchange with reasonable fees.
“This is so that people can easily acquire and liquidate their Bitcoins,” he said.
“Once this is done, value-added services like merchant payment solutions, money lending solutions, remittance solutions and fancy wallets can be built on top of that infrastructure.”
Beam, which is seeking a further funding round to scale more quickly, will be boosted by the recent news Bitcoin remittance startup BitPesa, which has operations in Kenya and Ghana, raised follow-on funding of US$1.1 million within a year of its launch.
BitPesa, which allows individuals to remit money in Bitcoin that the company then converts into physical currency, now plans to roll out services in Tanzania and Uganda having also recently started the sale of Bitcoin in Kenya and Ghana.
The startups’s most recent funding round took its total investment to over US$1.7 million, with the latest raise lead by Pantera Capital Management with support from Crypto Currency Partners, Stephens Investment Management and existing shareholders.