In brief
- The arrangement will let crypto recipients in Mexico cash out at more than 37,000 stores
- Coinbase says it plans to expand the program to other countries
Coinbase announced a pilot program on Tuesday that will let Mexicans receive crypto transfers and then convert the balance into pesos by presenting a redemption code at more than 37,000 stores. The transfers will be free of charge until March 31.
To arrange the transfers, Coinbase has partnered with the money transfer service Remitly, which has relationships with Mexican retail outlets like Bansefi, BanCoppel, Oxxo, Sorina, and Telecomm Telegrafos.
The announcement appears to be a shot across the bow targeting traditional money transfer services like Western Union, which charge fees that can exceed 6%. Here's how Coinbase describes the new program:
"Customers today can already instantly send crypto to recipients in Mexico directly from their Coinbase app. Once sent, the recipient will receive a notification and can immediately view the crypto balance in their Coinbase account. ... If they choose to cash out any part of their balance, they can generate a redemption code from their Coinbase app that can be used to receive cash at 37,000 physical retail outlets and convenience stores located across Mexico."
The company adds that transfer recipients can also elect to keep the crypto they receive in their Coinbase account or convert it into the USDC stablecoin.
After March 31, cashing out will incur a fee but one that Coinbase says will be 25-30% less than existing transfer services.
If the Coinbase program catches on, it could have a major impact on how Mexicans receive remittances from abroad, which totaled more than $40 billion in each of the last two years. Most of those funds arrived from the U.S.
In announcing the Mexico transfer program, Coinbase said it intends to expand the service to other countries where residents face high remittance fees, but the company didn't provides details on which ones or when.
The announcement is also significant in that crypto has long been touted as a way to improve global money transfers but has yet to gain major traction among everyday citizens. The company Ripple has made international transfers of XRP a cornerstone of its business, but its focus has been on banks and institutions.