Argentinian bank, Banco Masventas, has announced it will begin using Bitcoin instead of the international SWIFT system in order to make international transfers.
The move will begin on Monday and is the product of a partnership with start-up company Bitex, also Argentinian. This will mark an industry first, and is potentially hugely significant as it would see the beginning of real adoption in the traditional financial sector.
So why use bitcoin? Well, perhaps the question would better be why not; using bitcoin as a payments rail in this way will allow transaction costs to be slashed for customers and completion times to become fractions of what they are today.
The bank’s website states, “The service allows you to reduce costs associated with international transfers as there are no international banks as intermediaries.”
The move is, according to Jose Dakak, principal shareholder of Masventas, part of a broader strategy to develop the bank’s e-commerce and efficiency; their smartphone app is being overhauled and service costs are hoping to be reduced.
“One of the actions was to contract Bitex as a strategic partner in the implementation of the Bitex platform for payments and collections operations for our clients abroad,” said Dakak.
The system will work by essentially outsourcing payments to Bitex which will convert the transaction into bitcoin and then back into the currency of the transaction destination. The process is transparent, and the customers will not be handling bitcoin themselves. The transactions should clear in less than 24 hours, at minimal cost to customers.
The adoption of bitcoin and other cryptocurrencies as payment rails for banks is a huge step in the direction of adoption. But whilst Banco Masventas will be the first commercial bank to use bitcoin in this way, it will not be the first institution. Earlier this month ToshiTimes featured a Berlin-based company ‘BitBond’ which leverages bitcoin in much the same way; in order to deliver micro-loans internationally to those excluded from the international financial system.
Banking giant Santander has partnered Ripple to offer blockchain-based solutions to speed up transaction times and hopes to roll out same-day payment solutions between continents this summer.
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