Visa Europe's innovation lab was demonstrating its proof-of-concept remittance app, which sends funds over the bitcoin blockchain, at the UnBound London conference on 30th November.
The lab built the prototype with startup Epiphyte as part of a 100-day development project. Visa Europe Collab's Jon Downing and Epiphyte's Edan Yago discussed the reasons for embarking on the project, and for using the bitcoin blockchain instead of a closed network, in this CoinDesk exclusive.
At the conference, held under the Victorian railway arches of London Bridge, Collab's Nigel Clarke, an innovation partner there, gave us a hands-on demo of the money-transfer prototype with an exclusive screen-by-screen walkthrough.
The "remittance journey" starts on the send screen. This is a responsive web page that works on a desktop or mobile browser. The idea is for a user to link a Visa card to the remittance app. Once linked, the app will show an available balance and the corresponding card details.
The prototype comes with BitPesa built in as a third-party service that will enable the recipient to obtain their funds in a fiat currency of their choice. The user therefore has to sign up for a BitPesa or other third-party service account before sending funds, including performing any 'know your customer' procedures like uploading identity documents.
Once signed up, the user can then add a list of recipients using a variety of contact information. For example, Clarke said, a user could add a Kenyan telephone number to the recipient list.
"When I want to send funds to grandma, I put in her mobile phone number in Kenya," he said.
Once added, BitPesa generates a bitcoin address for the recipient, meaning the recipient never has to generate an address or wallet of their own to receive the funds. The sender can also include a note with the money transfer.
The recipient doesn't need a BitPesa account to obtain the funds. Instead, they would simply receive Kenyan shillings transferred by M-Pesa, the dominant mobile money channel there.
The app, then, has allowed 'John' to send 25 pounds from a Visa card to his grandma in Kenya, who received Kenyan shillings on her phone, with the whole process taking about six steps.
In between, the funds were taken from the Visa-linked account, converted to bitcoin and sent to an address generated by BitPesa, then converted into Kenyan shilling and transferred to the receiver's M-Pesa account.
The app's operator also gets a snazzy looking back-end to check on the status of fund transfers. Clarke walked us through the console.
A status bar at the top of the console visualises the remittance journey. For the purposes of the prototype, Clarke said, the plumbing connecting the app and the Visa card and its issuing bank wasn't built out. Instead, the prototype assumes the funds are there and the issuer will approve their transfer.
Once the funds are approved by the bank, the amount has to be converted by the third-party vendor, in this case BitPesa, into bitcoin. After that, the bitcoins have to be temporarily deposited into a wallet, also created by the vendor.
The proof-of-concept runs on bitcoin's Testnet - not the live blockchain. When a transaction is confirmed on the Testnet, the payment is marked as transferred and the transaction confirmed in the back-end.
Clarke punched in the transaction ID from our demo into Blocktrail's Testnet explorer. Initially, it showed that the transaction had not been confirmed yet, even though the console showed it had gone through. After several minutes, however, the transaction was confirmed on the Testnet.
The next stage of development for Visa Europe's bitcoin remittance concept is user research. According to Clarke and Downing, the last few days have been spent on research groups with users who regularly remit money, asking them questions about their comfort level with using bitcoin for remittances, for example.
Downing said users have been surprisingly curious about the use of bitcoin and its underlying technology. Initial responses from users suggest that they are neutral and sometimes positive about bitcoin's potential as a remittance technology, with little indication that they are fearful or cautious about using it, according to Downing.
In future, Clarke said, the remittance concept could be integrated with other third-party vendors, taking care of the "off-ramp" problem for users to receive their funds.
The app could ultimately be deployed in a number of different ways, including as a "white label" service to banks, Downing said.
But for now, the concept is drawing to the end of its 100-day development cycle. Clarke said the user research would inform the team's next steps, which would be to consider a commercial model for the product. This would include a possible fee structure and consideration of third-party vendors.
Downing stressed that there is no guarantee that the concept would be used in a commercial setting. Those decisions lie further down the road, he said.
"We wanted to test the technology's capabilities ... but we haven't made any of those decisions," he said.