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Immigrants and expatriates sent about $700 billion from the U.S. back home to their families in the form of remittances. But the sender fees can easily reach as high as 6% or 7%.
That’s why Coinbase is enabling people to send money from the U.S. to Mexico in the form of cryptocurrency with fees that can be much lower.
For now, the fees will be waived in the first few months of the service, but eventually, the fees should add up to less than a quarter of the fees that people currently pay, said Shilpa Dhar, vice president of product at Coinbase, in a blog post.
Initially, recipients in Mexico will be able to cash out crypto in local currency at more than 37,000 locations across the country, or save the crypto they’ve received in their Coinbase account.
One of today’s problems is that recipients can often only receive funds as cash in their local currency, so they don’t have an option to save, grow, or protect their funds from losing purchasing power due to currency depreciation.
Coinbase has long presented a way to instantly send crypto (including stablecoins, or cryptocurrencies that have a fixed price, such as USDC) to family and friends anywhere in the world for free, and to allow recipients to invest the funds in any of the 100-plus supported cryptocurrencies.
And today Coinbase is introducing the ability for recipients in Mexico to cash out funds in their local currency. The lower price of sending money and flexibility in how to store funds will allow recipients to keep even more of their money.
Instantly send funds and cash out
Here’s how it works. 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.
From there, the recipient can choose to cash out or save the funds 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.
If they choose to keep their funds on Coinbase, they can simply hold the crypto asset they received or convert and invest their balance in any of the 100 or more cryptocurrencies that Coinbase supports. That includes USDC, a stablecoin pegged to the U.S. dollar, which will allow the recipient to hedge against any devaluation of their local currency.
Free through March
Coinbase’s customers in Mexico will be able to cash out their crypto using this new service free of charge through March 31, 2022. After that date, customers will be charged a nominal fee that’s still 25% to 50% cheaper than traditional cross border payment solutions, the company said.
“We recognize this is a global issue. And while we’re starting in Mexico, over time we’ll consider other regions where customers face similar challenges,” Dhar said.
Coinbase’s mission is to increase economic freedom around the world, and this new product is core to enabling that mission. Dhar said the company wants to make it fast and easy for users to send crypto to anyone in the world, and allow recipients to participate in the crypto-economy.
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