Australian bitcoin exchange igot is looking to Kenya for its next stage of growth.
The Adelaide-founded startup recently acquired Kenyan crytpocurrency exchange and remittance gateway TagPesa. The terms of the deal were not disclosed. In addition the startup has launched a new merchant feature that allows businesses to accept bitcoin payments from anywhere in the world, and have them quickly converted to a fiat currency. Merchants pay a 0.5% transaction fee.
Igot already enables users to buy and sell bitcoin, and pay bills with bitcoin. Although the latter feature is only available in Australia and the number of people using it are in the hundreds, not thousands, according to founder Rick Day. But igot’s key focus is on remittance, and it’s TagPesa’s country of origin that made it an appealing acquisition.
“TagPesa has done some great groundwork in Kenya. For igot to launch in Kenya it was important that we have local partnerships and resources in place. TagPesa offered both,” Day says.
According to the Central Bank of Kenya, remittance inflows to the country totalled $US123 million in February. The average remittance transaction costs between 5% and 9%, igot charges 0.5%.
The success of mobile payments system M-Pesa, means Kenya’s mobile payment system is more advanced than many developed nations. Users of igot are able to cash out using M-Pesa’s mobile payment system.
“The remittance market in Kenya is huge and largely untouched by bitcoin companies,” Day says.
“Igot offers a global transfer service that uses bitcoin as the backbone. We’re present in 40+ countries with local banking relationships. For verified accounts, we’re able to send our users to send money from country A to B using igot and the bitcoin network.”
Day says the startup has not received any venture capital but is talking to investors and is “very far” along in the process.
“Our revenue model is very solid and we will continue to grow the company with or without VC investment,” he says.
However, CoinDesk reported igot received funding from US entrepreneur and investor Jesse Chenard last year. Day did not respond to a request for clarification prior to publication.
A quick scan of Reddit, finds a number of customer complaints, the vast majority of which have been resolved and revolve around delays in withdrawing money. Day says it’s a by-product of the important task of complying with anti-money laundering laws.
“As an online bitcoin exchange, it is challenging for us to know legitimate customers from fraudsters. We’ve stopped over $1.2 million worth of frauds in the past few months. Unfortunately, some legitimate customers get caught in this additional verification process and it can definitely be frustrating. We’re trying to improve our internal process to provide a seamless service to our customers.”