FastBitcoins has partnered with prepaid voucher giant Flexepin to increase its global footprint, while at the same time accessing mobile money providers in 14 countries in Africa, where demand for crypto is growing.
Announced Thursday, the deal with Flexepin (a subsidiary of ASX-listed payments company Novatti) expands FastBitcoins’ coverage to some 20,000 point-of-sale locations in Australia where Flexepin is based, as well as across Canada and Europe.
Flexepin caters to users who want to make online payments without using credit or debit cards. But in addition to improving the security and privacy of online spending, the service is about enabling many of the unbanked population worldwide to purchase goods and services using an alternate method of payment, according to the company’s website.
“The big one for me, personally, is we can accept mobile money payments in 14 countries in Africa,” said FastBitcoins CEO Danny Brewster. “So, users in places like Kenya or Uganda can use M-Pesa or MTN Pay on their mobile phone to buy a Flexepin voucher which is then redeemed for Bitcoin via us. We charge only 4.5%. The best price equivalent on, say, Paxful, charges 40%. That’s all through this Flexepin deal.”
There is an interesting shift in position here. A few years back, when M-Pesa was establishing a veritable monopoly in Kenya, its owners Vodafone and Safaricom were very resistant to any interoperability with Bitcoin on the grounds of anti-money laundering (AML) concerns.
“Today, the regulatory and AML environment surrounding Bitcoin is a far throw from what it was in 2013 and 2014,” said Brewster. “Also, our agreement with a publicly traded company like Flexepin provides leverage with all sorts of partnerships.”
M-Pesa did not return requests for comment by press time.
Rather like mobile money itself, which grew out of a hack where users traded mobile minutes as a form of cash, pre-paid cards and gift cards have become popular in Africa, where they can be exchanged for bitcoin on peer-to-peer platforms like Paxful. The redemption codes of cards purchased in places like Canada, for example, can be sent to relatives in Africa who then exchange these for bitcoin.
The likes of LocalBitcoins have banned gift cards because of the regulatory challenges, but Paxful says it has gone to some effort to continue supporting this channel since the vast majority of these transactions are legitimate and offer more access to the financial system for unbanked users.
Asked if Flexepin vouchers could be used in a similar way by African users of FastBitcoins, Brewster said:
“As long as the recipient has their account open with us, they can do that.”
For its part, London-based FastBitcoins has an application underway for registration with the U.K.’s Financial Conduct Authority in line with Europe’s Fifth Anti-Money Laundering Directive and has also signed up with government body AUSTRAC (Australian Transaction Reports and Analysis Centre).
Brewster explained that FastBitcoins’ approval involves some know-your-customer (KYC) checks, such as providing a driver’s license or passport, while doing the best to preserve customer privacy.
“The voucher is just the mechanism for transferring fiat to our platform, the AML/KYC is no different to any other exchange platform as per the regulatory environment of the countries we operate within,” he said. “As a company, we take those responsibilities seriously but also balance that with the onus placed onto the customer and their experience when using our service to ensure they only provide what is absolutely necessary.”
Since 2016, Flexepin has become the leader in prepaid vouchers used at cryptocurrency exchanges globally, Flexepin operations manager Effie Dimitropoulos said in a statement.
“Flexepin is happy to be a new funding method on the FastBitcoins site,” she said. “Every day, consumers around the world use Flexepin to purchase their first cryptocurrency and many more use it to add to their holdings. Flexepin is continually expanding its distribution network with thousands of online and offline locations being added regularly.”