Customers of El Salvador’s largest bank, Bancoagrícola, can now repay their loans and pay their bank fees in bitcoins (BTC).
Bancoagrícola accepts Bitcoin
This September 7, 2021, a month and a half after its approval by the Assembly, the “Bitcoin Law” became effective in El Salvador. “Any economic agent” must accept the use of BTC as a legal form of payment under the law.
Thus, the country’s largest bank, Bancoagrícola will allow BTC payments via its mobile app through a collaboration with Flexa. Customers will be able to pay for loans and bank card fees in BTC at the “exact market rate, with no additional fees or spreads.” The option is designed to work with any Lightning Network-enabled wallet, including El Salvador’s official wallet, Chivo.
Businesses operating in El Salvador, including Starbucks and McDonald’s, are now required to accept BTC as a payment method. Consumers, meanwhile, have the choice to pay in bitcoin or stick to the local currency, the U.S. dollar. To date, El Salvador was one of the few non-US nations to use the dollar as its official currency. Other countries in this situation include Ecuador, Somalia and Cambodia (bill only).
End of MoneyGram and Western Union’s stranglehold?
If El Salvador’s bitcoin adoption policy proves successful, international payment handlers such as MoneyGram and Western Union could lose up to $400 million a year, according to the country’s president.
Indeed, remittances account for a significant portion of El Salvador’s gross domestic product (GDP) (about 23% in 2020) and 70% of the population reportedly receives money from abroad.
Last August, the Central American Bank for Economic Integration, or CABEI, stated that the adoption of Bitcoin as a legal tender could have a positive impact on remittances in the region. At the time, the BCIE promised to help the country establish a technical framework and comply with international anti-money laundering standards.
