Alan Van Toai, entrepreneur and digital nomad, is facing a problem many jet setters face in the globalized economy. He is weeks away from launching Crewfire, a new social media marketing tool, his company is based in the United States but Van Toai now makes his home in Saigon.
Speaking to Trinh Nguyễn from Budapest he needs to pay an employee back in Việt Nam.
“Our company is a Delaware LLC so it’s a US entity and our bank account and our customers, everything happens in dollars in the US. But I live in Việt Nam now or have been for the last year and a half and we just hired in Việt Nam our first full time developer and he’s got a Vietnamese bank account.”
Alan, the CEO of the startup, is also a Bitcoin Vietnam user and instantly gravitated to cash2vn, a new service for international remittance that uses the country’s nascent Bitcoin network.
He says: “We were looking for ways to remit, send him money from our US bank account to his bank account and there’s some novelty associated with Bitcoin but for the first time, I found that there was actually this utility and that would save money and time on every transactions.”
Launched just last month in June, cash2vn, was created by Bitcoin Vietnam and seeks to tap into a customer base looking to send money fast, securely, and cheaply.
Bitcoin, the decentralized, anonymous and purely digital currency, made its way to Việt Nam in March 2014 with the country’s leading broker exchange service, Bitcoin Vietnam, entering the Vietnamese market. Since then, Bitcoin has been slowly winning fans among the country’s startups and entrepreneurs looking for instant and untraceable forms of payments.
How does cash2vn work? A sender will go online, enter in the amount and the bank information of the family or friends he or she wants to send money to, and a Bitcoin transaction delivers the payment to the recipient’s bank, which can then be cashed out in Vietnamese dong. Recipients don’t even need to know anything about Bitcoin, which is great because the concept of a digital currency is difficult to grasp for most consumers.
Dominik Weil, co-Founder of Bitcoin Vietnam, explains how:
“Actually, the recipient does not need to know about Bitcoin at all. the only person right now who needs to know about bitcoin is the person sending the bitcoin, initiating the remittance from his origin country, whatever country it is. And the person here, at the moment, the person just needs a bank account and that’s all.”
Sounds simple enough, but you might wonder what is the attraction of using cash2vn when hundreds of money transfer agents in brick and mortar shops are already servicing the Vietnamese diaspora? In short - IT'S fees. Cash2vn offers remittance services for a flat fee of $2 USD. Using, say, Western Union, someone would have to pay as much as $10 to send money from California to Saigon.
This year, nearly half a trillion dollars will be sent to the developing world from migrant workers and immigrants. These transactions are often a critical source of income for the immigrants’ families back in their home countries and it can often take days to reach a bank.
Overseas Vietnamese are sending so much money that it’s become a critical sector of the country’s economy. According to data from the World Bank, Việt Nam is among the top ten countries receiving remittances, with 11 billion dollars sent home in 2013. That’s 6 percent of Việt Nam’s total GDP.
Bitcoin makes it easier and faster to send money. But for Dominik Weil and many other Bitcoin entrepreneurs drawn to the cryptocurrency’s borderless features, Bitcoin’s potential for replacing traditional methods of remittance lies in its ability to service those who are financially excluded from the global market.
According to the World Bank’s 2014 Global Financial Inclusion Report, only 31 percent of Việt Nam’s population have some form of bank account and among the poorest of Việt Nam’s citizens, only 19 percent have an account.
That means the majority of Việt Nam’s population is unbanked and unserviced by any financial institution. These are also often the same families who are receiving money from loved ones abroad. Dominik Weil explains that Cash2vn has an answer for them, as well as for those digital nomads and tourists traveling in Việt Nam. He continues:
“The recipient does not need to have a bank account at this bank. we can send it to any bank branch in Việt Nam and we need the ID number and the data from that ID from the recipient and then can send the money to the choosing bank and the recipient is just going to the bank and get the cash. you don’t need to have a bank account at this bank or any bank at all.”
In the coming weeks, cash2vn promises to offer delivery services, where a recipient living in rural areas far away from banking institutions can have their cash delivered via a xe om, or motorbike, right to their doorstep.
Bitcoin’s rise in Việt Nam is nascent and tentative, and so is its potential for remittance. The Philippines is already serving as a successful case study in digital currency remittance.
The Philippines is third in the global remittance market, behind only China and India, with Filipinos receiving 25 billion dollars in remittances in 2013. Like in Việt Nam, traditional remittance services are abundant, but sending money is costly due to high transaction fees and high minimum deposits. But because the Philippines has a vibrant Bitcoin ecosystem, many Filipinos can turn to the handful of Bitcoin remittance service, some charging as little as 1 percent in transaction fees.
Time will only tell if Bitcoin and related remittance services like cash2vn will catch on in Việt Nam.
For Van Toai, the startup CEO, however, Bitcoin is not just a means to pay employees of his young company, he hopes it will help Việt Nam leapfrog in technology, fostering innovation and bringing along the unbanked.
“One of the areas that cryptocurrency have the most potential are these underdeveloped countries or less developed countries. These are countries that we take for granted in the US like banking systems, a very robust and comprehensive financial services, credit cards and debit cards, a strong fiat currency. They don’t exist in places in Việt Nam. And so a country like Việt Nam, we’ll see a similar kind of leapfrog in technologies. If Việt Nam is open to a potential with cryptocurrency, then Việt Nam can create financial services so that the unbanked or the un-debit carded or the un-credit carded in Việt Nam can start to take advantage of modern financial services that we take for granted in the west.”