Bitcoins are becoming a strong contender in the last mile finance space.
I would like to begin this article with this brave claim. And prove along the article, as to why this is true.
The Chief Information Officer of Western Union, Mr.John Thomson recently expressed his opinion on Bitcoins, on the Internet. Here is an important quote;
“Bitcoin as a technology doesn’t solve any problems for us in the core of our business. Our challenge is the last mile. How do I get that money in the person’s hand, and meet all the regulatory compliance needs in that country? So, I don’t really need it for the minimum. Moving a bit from Point A to Point B isn’t hard. The last mile is really hard.”
The Last Mile Finance Challenge
I completely agree with Mr.John Thomson, because Bitcoin as a technology cannot fill a void in their current model of business. There is no void for Western Union yet, to fill with Bitcoin technology. The models are just… not made for each other.
Taking the money to the last person, at the right time, within the legal boundaries, seems to be the challenge of the finance industry. Especially when financial inclusion at the bottom of the pyramid is important. More often than not, when there is a problem, there arises a solution(s). And Solutions did arise.
In the last three years, the successful cases of innovation in the last mile financial inclusion space are these two companies. They have achieved what banks with big bucks and governments with political will, could never achieve. They achieved in moving money to the last mile; safely, easily and on time.
These two technology companies, have enabled services similar to that of a bank, only difference being — these mobile based technologies were enabled in areas where conventional banking system never could penetrate. For instance, mPesa in Kenya has managed to penetrate 70% of the market with their service. In Pakistan, Easypaisa, has enabled phone bill payments and similar microfinancial transactions. EasyPaisa, has penetrated more than 50% of the market share. Just note that: Bank penetration in Pakistan is a measly 12%.
These are just two examples of what simplification of technology can do for the financial inclusion. Especially in the developing and under-developed economies.
Simplicity is the Key to last Mile Finance
Bitcoins are becoming a strong contender is the last mile financial transaction arena. The recent post on NewBTC, about ChangeTip, a San Francisco based company, is a good example of its last mile finance potential. There is no doubt as to why Bitcoins can not be a practical solution to solve this last mile finance problem. If the transaction involves anything less that $10, and can be powered with mobile based solutions, much like ChangeTip — we could potentially solve this problem.
Why Solve the Last Mile Problem with Bitcoins? Of all?
Bitcoins, as we all know and acknowledge, is a de-centralised currency. This is the best part. We are enabling the people in the democracies to take control of their money. Such peer-to-peer financial transactions can simply be monitored on a more than $500 level, this would ensure that the system is not being misused. Also, this would take the burden off the governments and banks to handle a transaction as small as $10. That’s why it makes sense.