New breakthroughs in cross-border payments in Latin America: more than 60 banks in 14 countries can use Bitcoin for cross-border transfers

A leading banking technology provider in Latin America is working with Bitex, a cryptocurrency exchange, to facilitate cross-border payments through the Bitcoin blockchain.

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Bituel Chief Marketing Officer Manuel Beaudroit said:

"Integrating Bitex into the Bantotal project is an important step in the breakthrough of blockchain technology in the banking industry."

Bantotal is a core banking service provider based in Uruguay, serving more than 60 different financial institutions in 14 different countries. According to a spokesman for Bantoal, an estimated 20 million people use Bantotal's money management services.

Sebastián Olivera, founder of the Uruguay Financial Technology Chamber of Commerce, said:

“Bantotal is one of the largest bank providers in Latin America, not only in Latin America, but also a huge player throughout the Pacific. For me, Bitex offers a great solution for payments, Bantotal Structure and name will drive their development."

This partnership means that Bantoal's customers will be able to use Bitex services in other traditional financial services markets.

Beaudroit said:

“With this technology, banks can access an API and control the entire (cross-border) payment process, and the visibility and reliability of the Bitcoin blockchain are good.”

Beaudroit called it a “great leap” for local banks in Latin America, saying that the average cost of using Bitex for cross-border payments was five times lower than international wire transfers.

In addition, Beaudroit said that these transfers are significantly faster. Beaudroit said that in February last year, after the switch between Argentina and Paraguay switched to Bitex's cross-border payment service, the payment time was reduced from one month to one hour.

In the eyes of competitors, such as stellar coins (also using their own blockchain network for cross-border payments), this partnership is seen as a positive sign.

Lisa Nestor, co-director of the Stellar Development Foundation, told CoinDesk:

“We believe this statement further demonstrates that financial institutions are realizing the value of digital assets and distributed ledger technologies that are used to implement core banking such as international payments. Similarly, these product partnerships are in Latin America (Latin America) The market launched, where cross-border payments, even in neighboring countries, may be slow and expensive."

How does Bitex work?

Bitex essentially acts as a middleman, translating legal currency payments into bitcoin for national and regional banks, and then converting back to legal currency instead of completing multiple currency conversions to legal currency.

Beaudroit said:

"If I want to pay from Argentina to Chile, I don't need to buy dollars in Argentine pesos, then transfer the dollars to the US, then transfer the dollars to Chile, then convert them into Chilean pesos. I can directly (using Bitcoin) from Argentina sends money to Chile."

Beaudroit called Bitcoin a "peer-to-peer banking" system, explaining that Bitex handles the conversion between local currency and bitcoin, and the process by which bitcoin eventually spreads to regional or national bank accounts.

Leo Elduayen, co-president of Bitcoin Argentina and founder of blockchain startup Koibanx, said that, in general, the process of cross-border transfers with local banks in Latin America may require 48 to 96 Hours, depending on the bank branch and financial intermediaries that are used.

Elduayen described the entire cross-border payment process using Bitex as a bank end-to-end solution, he said:

"Bitcoin purchases and (transfers), Bitex is done on your behalf. You only need to send money as a user, Bitex will help you with the rest."

"Good first step"

In cooperation with Bantotal, Elduayen suspects that although there are still many obstacles to “letting banks join”, the availability of Bitex services by Latin American consumers will increase significantly.

In this regard, Olivera said that understanding the customer (KYC) and anti-money laundering (AML) legislation is still a major issue for banks when using the Bitcoin blockchain.

Federico Ast, chief executive of Buenos Aires arbitration startup Kleros, agrees, adding that the regulatory uncertainty and the cryptocurrency are “a short-lived ", is still the main obstacle to Latin American banks entering the market.

"I have to be honest. I think this is just the first conversation. It is too early to say whether the bank will choose to work with Bitex, but this is a good first step."

Rebuilding trust

At the very least, both Ast and Olivera see the collaboration between Bantotal and Bitex as an opportunity for Latin American consumers to understand the benefits of blockchain technology and help rebuild consumer trust in existing financial institutions.

Ast said,

“Historically, Latin America’s financial system has been weak. There is a history of bank runs, and some of the sad things are that people’s savings are confiscated (such as Argentina in 2001). This agreement will reduce consumers. The cost of improving financial inclusion."

Bitex's Beaudroit is hoping that this partnership will also promote more business activities through a “peer-to-peer approach” that will contribute to the growth of Latin American countries' gross domestic product.

As a result, Bitex's consultant and founder of digital governance startup Democracy Earth, Santiago Siri, said that Bitex's work is much more than just a cryptocurrency trading platform.

Siri said:

“It is an ideal partner for banks to use Bitcoin… as a way to connect to banks, this approach is not common in the industry, but it is the basis for markets such as Latin America.”