A leading bank technology provider in Latin America is partnering with cryptocurrency exchange Bitex to facilitate cross-border payments over the bitcoin blockchain.
“The integration of Bitex into Bantotal program represents a major step in the breakthrough of blockchain technology in banking,” said Bitex Chief Marketing Officer Manuel Beaudroit.
Bantotal is a core banking service provider based in Uruguay that services over 60 different financial institutions across 14 different countries. According to a Bantotal spokesperson, an estimated 20 million people use Bantotal’s money management services.
“Bantotal is one of the biggest banking providers in Latin America and is a huge player not just in Latin American but the greater Pacific,” said Sebastián Olivera, founder of the Uruguayan Fintech Chamber. “For me, Bitex provides a great solution for payments and they will be boosted by the structure and name of Bantotal.”
The partnership means that Bantotal clients will be able to access Bitex services in a marketplace of other traditional financial services that Bantotal offers through its BDevelopers program.
“With this technology, banks can have access to an API and have control of the whole process of [cross-border] payment with visibility and reliability on the bitcoin blockchain,” said Beaudroit.
Calling it a “quantum leap” forward for local banks in Latin America, Beaudroit said that average fees associated with cross-border payments are up to five times cheaper using Bitex than international wire transfers.
What’s more, these transfers are significantly faster, according to Beaudroit, who said payment times for exporters between Argentina and Paraguay in one instance last February dropped from one month to one hour after switching to Bitex’s cross-border payment services.
The partnership in the eyes of competitors such as Stellar, which also specializes in cross-border payments leveraging its own blockchain network, is seen as a positive signal.
How Bitex works
Bitex essentially acts as a middleman for national and regional banks to convert fiat payments into bitcoin then back into fiat, as opposed to completing multiple fiat-to-fiat conversions.
“If I want to do a payment from Argentina to Chile, I don’t need to buy dollars with the Argentinian pesos then transfer the dollars to the U.S. then move the dollars to Chile and exchange them into Chilean pesos,” said Beaudroit. “I can just send a payment from Argentina to Chile directly [using bitcoin].”
Calling it a system of “peer-to-peer banking,” Beaudroit explained that Bitex handles the conversion of local currencies into and from bitcoin, as well as, its ultimate dispersion into regional or national bank accounts.
Normally, this process of transferring money across borders with local banks in Latin American can take anywhere from 48 to 96 hours depending on the specific bank branch and financial intermediaries used, according to Leo Elduayen, vice president of non-profit Bitcoin Argentina and founder of blockchain startup Koibanx.