El Salvador’s largest financial institution, Bancoagricola has partnered with Flexa, the world’s leading digital payment network, for Bitcoin payments. The deal would boost the crypto uptake in the country as it helps increase Bitcoin access to the masses.
According to the announcement by Flexa about the partnership, the deal will allow consumer and merchant clients to make payments using Bitcoin across the platform’s networks for various transactions. They would be able to pay loans, remit credit card payments and offer various Bitcoin merchant goods and services in line with the new Bitcoin law.
The deal between the bank and the Bitcoin payments platform is the first of its kind in the global economy. It would allow the bank’s customers to use the Flexa or any other lighting-enabled crypto wallets like Chivo and Eclair to make payments in US dollars at the normal market rate. With no additional fees or spread.
The partnership will also see the bank introduce turnkey, fraud-proof Bitcoin payments for its merchants’ clients’ Point of Sale (PoS) before the end of the year.
What does the partnership mean for Bitcoin as a legal tender in El Salvador?
The deal between Bancoagricola and Flexa comes on the back of El Salvador approving Bitcoin as a legal tender. This gives the coin the same status as the USD in the economy. Since then, the rate at which merchants are accepting Bitcoin as a method of payment has gone up. With the deal in place, they can accept digital payments seamlessly without messing up the cash flow.
While the new Bitcoin law was a way to improve the country’s economy, it has not lacked opposition. Various government officials have been in the frontline, as they made their feelings known by wearing anti-Bitcoin t-shirts. A study also found that around 67.8% of the Salbadorinas do not fancy the new law. The main reason behind this is that they don’t understand how the Bitcoin network operates.
Given that Bancoagricola is already a popular financial institution among the population, accessing Bitcoin information will become easier. Also, the population tends to trust the traditional financial institutions more, hence by bringing Bitcoin access through the bank, they are likely to be more receptive.
The possible impact on the global crypto landscape
Given its a one of a kind deal, this partnership is likely to impact the whole crypto market. For the longest time, banks have not been pro cryptos. They have often discouraged their clients from using digital currencies due to the volatility concerns and lack of regulations.
However, some quarters understand the issue comes from the fact that a successful crypto world means doom for traditional financial institutions. For example, a successful full Bitcoin uptake in El Salvador would mean traditional financial solutions like Western Union lose $400 million in a year, according to the president of the country.
However, a successful partnership between a bank and crypto payments solutions would mean both traditional and digital finances can coexist. Already, XRP is a crypto that helps banks in fulfilling their functions like cross border transactions. By being able to support more cryptos, most people will get exposure to digital currencies hence more uptake and mainstream use.
