A startup called Bitrefill wants to let people top up their mobile phone credit with bitcoin in more than a hundred countries around the world.
Bitrefill's website lets users punch in a mobile number, select the amount of credit they wish to add and then pay in bitcoin.
The service's founder Sergej Kotliar said that his platform, which started two weeks ago, allows users to top-up their phones without having to travel to a local convenience store to buy credit.
"We do exactly what a local 7-Eleven would do in that country. They have a terminal integrated with similar types of services, and they handle the store-front and the consumer interaction."
Kotliar said Bitrefill is connected to a number of third-party service distributors to process transactions. These distributors are in turn connected to various telcos around the world. This gives Bitrefill coverage with 425 operators in 113 countries, according to the startup.
After Bitrefill users have entered their phone numbers and selected the amount of credit to add, they are presented with a wallet address generated by BitPay and told the amount of bitcoin they must send.
After the transaction has been confirmed on the bitcoin network, Bitrefill's servers pay the operator. The credit is then added to the user's phone.
Customers have no guarantee that their phone credit will arrive after they've paid for it in bitcoin. They have to trust that the service – and Kotliar – will hold up its end of the bargain and transfer the phone credit. To address the issue, Kotliar said he will let users publicly review the product soon.
"You pay and you hope the product will be delivered. We have reviews functionality coming up, so people will be able to write angry notes if it didn't work for some reason," he said.
When CoinDesk tested the service, using it to top-up a mobile phone number in Singapore, the credit arrived 23 minutes after the funds were sent to Bitrefill.
Bitrefill doesn't charge any additional fees, although Kotliar said that the mark-up for phone credit ranged from none to 30%. He said this was the same as or lower than the mark-up added by credit card issuers.
A check on rates charged by popular phone top-up services for a Malaysian number showed that Bitrefill offers the lowest rates. Phone credit worth 10 Malaysian ringgit cost RM15.67 on TapUp, RM14.90 on WorldRemit and RM12.25 on Bitrefill. One service CoinDesk tried, Sendly, didn't offer the service for that number.
Many operators also let users buy credit online through Internet banking or credit and debit cards at no additional cost to the user. But these services often work only if the user has a bank account or card issued in the operator's country, as was the case with the Singapore number CoinDesk tested.
Kotliar said his service had completed "hundreds" of credit top-ups and that interest was strongest from countries like Indonesia, the Philippines, Egypt and Nigeria.
Bitrefill has not raised any external funding, Kotliar said. Before working on Bitrefill, Kotliar started a mobile local deals service called Rabble in Sweden. He also researches cryptocurrencies for BAS ITG, a consulting firm in Stockholm.
Targetting the massive remittance market
Kotliar said Bitrefill could eventually target the massive remittance market, which saw $440bn in transactions in 2010, according to the World Bank's last global survey on the industry.
"For the remittance case to be viable, bitcoin needs to be available in the receiving country, which right now, it isn't really," he said. "But by doing [Bitrefill], you create a service where bitcoin becomes at least usable with your local mobile operator [...] it has value in those countries, even if no local service there allows it."
Other bitcoin entrepreneurs working on bitcoin and remittances agree with Kotliar's analysis. Akin Fernandez, for example, runs bitcoin voucher platform Azteco. He is looking to work with vendors in Africa. Fernandez said systems like Bitrefill could fill an important need in those markets.
"If they are using their mobiles as de facto banks with bitcoin, it's important to keep them topped up so they can receive and send money," he said. "Now that task is made easier with Bitrefill. It's another piece in the puzzle [...] that will empower the unbanked and eliminate the need for banks and fiat currency for the banked," he said.
When asked, Fernandez said he was unbothered by the fact that Bitrefill users have no guarantee of receiving their mobile credit after paying. He said that the same risk applied to all online purchases.
Featured image via Institute for Money, Technology and Financial Inclusion / Flickr