- Bahamas-based payment platform Island Pay introduces cryptocurrency as a remittance solution in response to high transfer costs.
- Island Pay’s digital wallet, CiNKO, utilizes Circle’s USDC stablecoin, and is projected to decrease the cost of international money transfers by 80%.
The Latin American region is grappling with the high expenses and complications of traditional settlements. Many people face exorbitant rates when sending money, and a significant portion of the populace remains unbanked. In a bid to address this issue, the Bahamas-based payment platform, Island Pay, has opted to provide cryptocurrency as a remittance alternative, as reported by Bloomberg.
Crypto Adoption: A Solution to High Transfer Costs
In Latin America and the Caribbean, Island Pay is launching a digital wallet called CiNKO that will primarily use Circle’s USDC stablecoin as its medium of exchange. Available in over 30 countries, the CiNKO wallet will allow users to fund prepaid cards, transact with vendors, and send payments to others, irrespective of their banking status.
“Our objective is to consistently explore methods to enhance financial inclusion in the region and enrich financial experiences for both the banked and unbanked demographics,” stated Richard Douglas, Island Pay’s CEO.
As Circle’s Chief Business Officer Kash Razzaghi revealed in an email reported by Bloomberg, the CiNKO wallet forms part of a broader initiative to incorporate stablecoins and decentralized finance protocols in Latin America. Circle’s recent research indicates that this technology could slash the cost of sending money abroad by 80%. Though receiving USDC on CiNKO wallets is cost-free, a “gas fee” may apply, depending on the blockchain used for the transaction.
It’s worth noting that Island Pay is not alone in this arena. Several cryptocurrency wallets and international payment platforms already exist in the market.
World Bank data reveals that transferring $200, for instance, incurs an average cost of 6.2% and often takes days when using traditional financial intermediaries. Nevertheless, remittances to Latin America and the Caribbean escalated by 27% in 2021 and 11% in 2022, reaching $145 billion in 2017. Despite the region’s GDP decelerating to 3.3% this year, remittances are projected to attain record highs.
Monica Talan, the founder of CryptoConexion, a Web3 and decentralized finance educational portal, highlights ease of use as a major hurdle for cryptocurrency remittances. The majority of Latin American countries offer limited locations to expend Bitcoin or ether. Island Pay’s adoption of the USDC stablecoin is thus a significant step toward improving the accessibility and affordability of remittances in the region.