Tala, a US-based Fintech Startup, has partnered with Visa, a credit card giant, to drive the use of cryptos in emerging markets. The idea behind this partnership is to provide easier access to cryptocurrencies for underbanked consumers, beginning with USD Coin (USDC), a stablecoin backed by the U.S. dollar and governed by the Centre Consortium.
Crypto offerings to unbanked consumers
USDC is supported on Ethereum, Algorand, Solana and Stellar blockchains.
The collaboration will also involve Circle, one of Centre’s founding members, and the Stellar Development Foundation that oversees the XLM cryptocurrency.
The seven-year-old Santa-Monica-based startup has given over US$2 billion in credit to more than 6 million customers across Mexico, the Philippines, Kenya and India.
Through the integration with Circle and Stellar, Tala’s customers will gain access to USDC in Tala’s digital wallet, supporting asset storage, cross-border transfer, and crypto-fiat exchange functionalities.
The partnership with Visa will provide Tala with the ability to issue Visa cards linked to the wallet, enabling Tala’s customers to spend against their USDC balance at any of the 70 million merchants worldwide accepting Visa.
“Following the growth of stablecoins like USDC, we have been really interested to see how they could have the potential to help consumers in markets where they don’t have great access to financial services,” says Cuy Sheffield, head of crypto at Visa.
In December, the credit card giant partnered with Circle to drive USDC integration into Visa’s growing network of digital wallets.
Tala clients can get microloans, ranging from US$10 to US$500, through a smartphone app, regardless of their formal credit history.
Available data shows that Tala has raised more than $200 million from PayPal Ventures, RPS Ventures and GGV Capital, among others.
“Tala is hoping that its crypto offering will lower the cost of remittances for its customers, says Tala’s CEO Shivani Siroya, who founded Tala after studying the impact of microcredit in sub-Saharan and West Africa for the U.N.
In recent years, cryptocurrency remittances have become a popular way for migrant workers to send money across borders, often being faster and cheaper options than traditional financial services like Western Union and MoneyGram.
The World Bank estimates the average percentage transaction fee for cross-border remittances to be around 6.51% as of Q4, 2020.
The partnership marks the first significant crypto initiative for Tala, which recently expanded its product suite to provide a fuller scope of financial services to consumers in developing economies.
During the COVID-19 pandemic, the digital financial services provider launched the Tala Rebuild Fund to provide 0% interest, 6-month loans to small businesses with essential services.
Additionally, Tala made COVID-19 medical insurance available to all of its customers in Kenya at a subsidized rate.
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