Indonesia bitcoin and the unbundling of the remittances market

Indonesia bitcoin and the unbundling of the remittances market. Image: Freepik
Written by Bernard Lunn

We are seeing the unbundling of the remittances market, says Bernard Lunn, as he looks at Indonesia as an exciting business capital.

So far, we’ve looked at relatively small countries in our Alternative Bitcoin Capital tour, which has included the Isle of Man, Estonia, the Pan African currency union, Argentina, and Iceland. Indonesia isn’t small, however you cut it. It has a population of 256 million (close to America in size) and a GDP ranked #16 in the world (between Mexico and the Netherlands). Indonesia is exciting for business because of those Asian GDP growth rates – at 5.8%, this is almost double that of most countries in the west.

This is the story that prompted me to find out what’s happening with bitcoin in Indonesia.

Residents of Indonesia can now buy and receive bitcoin over the counter at over 10,000 ‘Indomaret’ convenience stores around the country. The project was developed on the initiative of Bitcoin Indonesia, and will run through its exchange in partnership with payment processor iPaymu.

This matters because of remittances. Jakarta Post has the details: ‘Indonesia received US $7.2bn from around 6.5 million migrant workers overseas in 2012, the World Bank said in a recent report. The figure was equal to about 1% of the nation’s gross domestic product, making Indonesia the third largest recipient of remittances in Southeast Asia.’

If you remit via bitcoin, those 10,000 stores are your off ramp, where recipients can get Indonesian rupiah for spending. It’s a natural for the Indomart stores: they get foot traffic. Read that and weep, Western Union. We’re seeing the unbundling of the remittances market:

  • The on ramp are bitcoin ATMs, where you put in fiat and get back bitcoin.
  • Transmittal is via the open bitcoin network.
  • The off ramp is via mass market retail in the recipient country, which is where the Indomart story is significant. This is like M-Pesa but better (more open and permission-less).

From a single company/brand controlling the end-to-end experience, remittances is becoming unbundled to an ecosystem.

This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read the original article by Bernard Lunn of Daily Fintech.

About the author

Bernard Lunn

Bernard Lunn is a serial entrepreneur who used to work for fintech companies such as Misys and Temenos. He has done turnarounds and startups in America, Asia and Europe. He lives in Switzerland and works as an adviser connecting banks, funds and strategics to fintech innovation globally. As part of the research for this, he is Founding Editor of Daily Fintech and provides mentoring to startups.

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