Western Union, MoneyGram and others threatened in El Salvador?
According to the media outlet CNBC, President Nayib Bukele said that MoneyGram, Western Union and other services used in El Salvador could see a drastic reduction in revenue. It has to be said that this is a huge market: in 2020, the country recorded $6 billion in incoming money transfers.
This corresponds to 23% of the country’s GDP. If you take that in relation to the population, the share is even more telling: 70% of El Salvador’s inhabitants receive payments from abroad. That’s why international payment processors are so important in the country.
The problem with these services is that they often require a physical visit to a physical store. The prices charged are also exorbitant: 12.5% for a transfer of a hundred dollars for example.
Bitcoin (BTC): a kick in the pants?
The app that could replace all that is Chivo. The government-developed Bitcoin (BTC) wallet allows free international transfers. As an incentive to use it, the government is offering $30 to all adults installing the app, which does not require mobile data to operate.
That $400 million figure is, of course, contingent on massive adoption of Chivo, and thus Bitcoin, by El Salvador’s population. But that could happen: at present, 70% of El Salvador’s population lacks traditional financial services.
Not everything is rosy in Bitcoin land, however. Already, Chivo has come under fire for being highly centralized – the government can theoretically freeze the cryptocurrencies on it. Still, Salvadorans are free to use another wallet, now that all merchants in the country are forced to offer BTC payment options. So the full-scale test of Bitcoin adoption should be particularly interesting to watch.
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About the author : Marine Debelloir
Associate Editor on Cryptoast, I fell into the crypto-currency pot a few years ago. I’m passionate about the innovative technologies that stem from blockchain and I love to dig up the most juicy news to share with you.
All articles by Marine Debelloir.