Bitspark is targeting Hong Kong’s sizeable population of Indonesian migrant workers with a new bitcoin-enabled remittance corridor.
The announcement comes just a month after launching an identical service servicing the Philippines.
The firm is pitching its low-cost way of sending money back home to more than 165,000 Indonesians residing in Hong Kong – 90% of whom are employed as foreign domestic helpers, according to the Census and Statistics Department.
This means a customer walks up to the firm’s counter at World-Wide House, a popular migrant worker hangout, to hand over their Hong Kong dollars. Bitspark coordinates with its Indonesian partner, Artabit, which enables the recipient to collect Indonesian rupiah from a bank or post office within 24 hours.
The process allows customers to deposit and withdraw cash, without touching bitcoin, while Bitspark and Artabit transact in the cryptocurrency. In the Philippines, Bitspark works with bitcoin exchange Rebit.
Bitspark co-founder George Harrap said:
“We can now do same-day transfers in Indonesian rupiah to the other end.”
Diversifying the customer pool
The firm has moved to charging a flat fee for remittances instead of the 1% cut it levied for transfers to the Philippines last month. Customers sending funds to Indonesia pay HK$25 (US$3.22), while those making transfers to the Philippines pay HK$15 (US$1.93).
Even as the firm expands its remittance reach, it’s also diversifying its pool of customers.
Harrap says that his firm is now transferring more money for companies instead of individuals. Employment agencies for foreign labour in Hong Kong, for example, remit funds to their home countries regularly to meet overhead expenses there.
“Employment agencies will often have an office in the Philippines where they source many of the candidates. They have bills to pay in the Philippines,” Harrap said.
Bitspark is currently completing 10 to 20 transfers a day, according to Harrap, and volume has been doubling every week. Business customers are driving the higher volume, Harrap says, because they typically remit funds fortnightly compared to monthly remittances by individuals.
Traditional fiat currency remittances to Indonesia from Singapore cost 5% of the transferred amount on average, rising to as high as 10% of funds, according to the World Bank. The World Bank doesn’t track the cost of funds sent from Hong Kong, but the Singapore-Indonesia corridor is comparable.
Unscathed by bitcoin price crash
Bitcoin’s crashing price hasn’t triggered any losses for Bitspark, Harrap said, although he declined to state his firm’s methods for insulating its funds from bitcoin’s price volatility.
He said only that he didn’t necessarily exchange remitted funds for bitcoin immediately, and that he had figured out a “better” method.
Harrap is among those who are trying to exploit bitcoin’s potential as a means for cross-border transfers rather than its properties as a speculative financial asset.
“For our remittance service we don’t care if the price is $1 or $1m. Bitcoin is the means of transmission. We’re getting the message across that bitcoin has real-world applications besides speculation.”
Indonesia image via Shutterstock