A US startup is hoping to shake up the multi-billion dollar remittance market with a mobile app that bypasses the middle men by using the bitcoin blockchain and a network of 'human ATMs'.
The brainchild of Bill Barhydt and backed by RRE Ventures, Abra (A Better Remittance App) is an iPhone and Android software cash wallet and money transfer application that promises to help users bypass the expensive fees involved in the $550 billion remittances by cutting out the middle man.
The app relies on a network of 'tellers' who facilitate transactions. When a user wants to deposit some money into their account, they can either use their debit card or pull up a map within the app that shows nearby tellers, their ratings from users and their fees. The user then picks a teller and arranges to meet them in person and hand over cash in exchange for "digital cash".
The digital cash is sent to the user's phone using the blockchain to settle. However, the funds are guaranteed in US dollars and the value of the holdings in the wallet do not fluctuate with the value of bitcoin for at least three days after the initial deposit. The user sees everything in dollars, with bitcoin kept in the background.
Once the user has funds in their account they can send money to someone oversees. The recipient gets a message telling them they have been sent funds and pulls up a list of nearby tellers before meeting one and withdrawing the money.
The system is based on the Hawala model, which has been used to move money for centuries. Hawaladars are people who collect and hand out funds on behalf of others over long distances, settling with each other via barter transactions.
Traditional Hawala’s are generally illegal in the US as no one is allowed to hold or remit funds on behalf of someone else without being a licensed money transmitter. But Abra users and tellers are always holding their own money just as with the standard open source bitcoin software.
The tellers simply buy and sell digital currency directly to and from other consumers in their neighbourhood in small amounts for a fee, with Abra taking 50 basis points on either side.