20% of the remittances between South Korea and the Philippines powered by Bitcoin

posted about 6 years ago
Seoul-based KakaoTalk has more than 170 million registered users on its flagship chat app, and enjoys nearly 93% market penetration in South Korea. But when the $2.9 billion company made its first-ever overseas investment this spring, it was a surprising one: a 40% stake in Satoshi Citadel Industries (SCI), a Manila-based Bitcoin startup with no connection to messaging.

While there are only 60,000 migrant Filipinos working in South Korea they collectively send home more than $231 million in personal funds each year. That works out to about $300 per person, 50% higher than the global average.

A few large players tend to facilitate these payments, and the lack of competition in certain markets (including the Philippines-South Korea corridor) can make costs prohibitive.

Transferring $20 from the US to the Philippines via Viber and Western Union incurs a flat $4 fee, along with a 4% foreign exchange fee. After being converted to the Philippine peso, the money arrives at its destination as $15.15, a loss of nearly $5.

That may not seem worse than an average ATM fee, but the vast majority of Asian migrants are domestic helpers, crewmen, and construction workers. Most send home the equivalent of $200 each month—often more than a quarter of their personal income. The roughly $12 in fees they must pay to transfer that amount is equivalent to half a day’s wages.

The nascent industry has spawned at least three new players in the past year—Payphil, Sentbe, and SCI—and more established Bitcoin exchanges like Korbit and Coinplug are also entering the market. They seem to be having an impact—that $12 charge on a $200 transfer is more like $6 with Bitcoin.

Insiders estimate that Bitcoin-powered transactions now account for 20% of the remittances flowing between South Korea and the Philippines each year.
Tags: news, bitcoin