Enterprise payment platform Tribal Credit has partnered with Latin American crypto exchange Bitso and the Stellar Development Foundation to create a new cross-border payment service for businesses, opening the door to broader use cases for blockchain technology in the region.
The new service, which is geared towards small- and medium-sized enterprises, enables companies in Mexico to pay for goods and services in their native peso currency and have their counterparts in the United States receive the payments in dollars. The service will rely on the Stellar blockchain, a decentralized open-source payment network specializing in cross-currency transactions.
Tribal Credit’s cross-border payment system will be facilitated by Bitso, a multi-billion-dollar crypto exchange that will enable merchants to convert pesos to Stellar's USDC stablecoin. Bitso was a key partner in the rollout of El Salvador's state-issued Bitcoin (BTC) wallet Chivo.
El Salvador's Bitcoin journey is forging on. The central bank of El Salvador has published draft regulations on how banks should handle BTC. https://t.co/GFiN0m0cEX— Cointelegraph (@Cointelegraph) August 19, 2021
The Stellar Development Foundation, or SDF, is a non-profit organization supporting the growth and adoption of the Stellar blockchain. Stellar’s native XLM cryptocurrency has been a mainstay in the digital asset market over the past four years and currently ranks 26th by total market capitalization. (Interestingly, two members of SDF were inducted into the Cointelegraph Top 100 for 2021.)
When asked why Tribal Credit selected Stellar for its cross-border payment service, chief research scientist Ehab Zaghloul told Cointelegraph that the protocol aligns with Tribal's mission to "promote financial inclusion and democratize access to financial services." Stellar is also "fast and charges nearly nothing for transactions, making it far more affordable and efficient than its competitors," he said in a written statement.
Fast and efficient cross-border payments are one of the most promising use cases of blockchain technology in an age where traditional wire transfers remain cumbersome, expensive and slow. As Cointelegraph reported, credit card giant Visa acquired cross-border payment fintech Currencycloud in July for an undisclosed amount. The acquisition is intended to help Visa improve its foreign exchange business.
Tribal Credit has identified Latin America as one of the world’s fastest-growing markets for cross-border transactions involving businesses. Led by Mexico, the region represents a $175 billion market opportunity that could be ripe for disruption by companies willing to experiment with blockchain technology.
"Economic conditions in Latin America certainly do make the region receptive to crypto payment services," Tribal Credit's chief strategy officer Mohamed Elkasstawi told Cointelegraph in a written statement. "Crypto and stablecoins serve as a hedge against inflation and currency devaluation not just in Latin America, but in many other countries as well." Elkasstawi also credited widespread adoption of smartphones for crypto's growing mainstream appeal in the region:
"It’s also worth considering that everyone with a smartphone can transact in crypto, so in a region where not everyone lives a reasonable distance from traditional financial institutions, cryptocurrencies provide a useful supplementary financial service for many individuals across Latin America.”