What If You Could Send Money Across Borders as Fast as a Text?

Justin Norman: For years we've been promised global money movement at the speed of the internet, where technological capabilities and user experience meets consumer expectations. And yet the way much of the world's money moves across borders is like this.
When we talk about the future, we tend to focus on technology. 
News Clip: Will technology shape our future or will we?
Justin Norman: Yet so much of FinTech and global money movement is actually a human story…. 
News Clip: Sending them money is now easier than ever... 
Justin Norman: …about the users who adopt technology and those who don’t.
They are digital apps. There's banks. There's crypto and stable coins, yet the majority of immigrants sending money back home to Latin America still use brick and mortar stores where the senders pay in cash and take a photo of their receipts to send to their loved ones over WhatsApp. Naturally, it raises a question, why can't money be sent that way as well?
Justin Norman: Every year, millions of immigrants in the US send billions of dollars back home. These payments are called remittances. The first remittance payment I made was in 2017 when I was moving to South Africa, and I remember being surprised at how expensive it was and how long it took for the money to get there.
So I'm on my way to one of the biggest remittance sending neighborhoods in New York City to see how things work today.
Justin Norman: Jere in New York City, there's a neighborhood called Jackson Heights, one of the most diverse neighborhoods in the city. A melting pot where people from every corner of the world come to build a life, walk the streets, and you'll see cultures thriving side by side. And then there are these countless money transfer shops lining the streets, enabling immigrants to send money back home.
Jackson Heights is 65% Hispanic, and these money transfer stores are here to service the immigrant remittance market where over $160 billion will be sent from the US to Latin America this year. For Miguel, he comes to this branch about once a week, sending money home US to Mexico is the single largest remittance corridor in the world.
Where around $65 billion will be sent this year. These payments can be a lifeline for its recipients and account for up to 50% of their total income.
Despite that, up to 90% of the senders have bank accounts, 60 to 70% of Hispanic immigrants in the us. Still send money back home like this. Long lines weary customers, slow processes. When it's finally your turn, give your details, pay in cash, sign the receipt. Take a photo of the receipt and send it to your loved ones back home to collect the money. 
Justin Norman: So what makes a slip of paper feel more trustworthy? Even after hours of waiting in line, then technology that can deliver money instantly. Hello? Hello. It's good to meet you. Likewise. That's Manuel Gado, an entrepreneur driven to make sending money home easier and more affordable. For the Latino community in the us, 
Manuel Godoy: Spending money is the most important financial transaction that these folks make.
They want to make sure that the money gets there. So I met this guy called Ramon. Ramon, he's in his forties. He has a smartphone. He has a bank account. Actually, he has all the tools to send money very simply on his phone, but he was still going to the same store, like committing one hour every Friday to go and send from the same physical store. But he told us that it was about trust. 
Justin Norman: The majority of payments originate at brick and mortar stores. Because the senders trust and prefer to send their money through human agents. Okay. But there is one last aspect of the remittance process where technology is trusted and relied upon sending a photo of the receipt over WhatsApp so the money can be collected in the home country.
Manuel Godoy: And we saw this with many, many folks in in South Philly, but then we went to the Bronx, we went to Houston, we then went to la. So it was a universal behavior, if you will. That's when at that point we said to ourselves. Why not? We emulate experience habits of the store, that human interaction, but enable the convenience of a digital payment.
Justin Norman: Instead of building an app, Felix built directly inside WhatsApp using a Spanish-speaking chatbot. It's a use case made possible by stablecoins. 
Manuel Godoy: Remittance can sound very transactional, right? You're sending money and goodbye. But really this is one of the most personal habits of these folks have.
It's very important for us to create this deep connection and to create a deep connection. We just simply have to talk through the language, right? And that creates this emotional reaction that we're seeing with the users. You know, that they feel like we're talking to a friend.
Justin Norman: Felix's Chatbot speaks to users in Spanish.
Just to start, what do I just say? Hola? 
Manuel Godoy: Yeah, hola. 
Justin Norman: You can send it voice notes and it understands country-specific slang.
Justin Norman:  Enviar dinero. 
Manuel Godoy: Even with the accent. I love it. 
Justin Norman: To compete in the multi-billion-dollar remittance market. Felix needs to build trust with a better user experience, 
Manuel Godoy: You can actually put, you know, a hundred dollars or 2000 pesos and the bot is gonna understand exactly what you mean.
And then, okay, we ask like, how do you want the money? So do they want in a back account, do they want in a wallet or do they want it in cash? So you have the confirmation so you can send now. Boom. That's it. That's it. When we ask our users, what do you love about Felix? They overwhelmingly say, we started realizing that that immediacy, it's critical for our users
Justin Norman: Gregorio is a Mexican immigrant living in California and an early Felix user.
Manuel Godoy: What's interesting that the users don't really care what's happening under the hood, I always say that it could be a donkey going through the border with the money. It doesn't matter as long as the money gets there very quickly and they maximize the value that they send and they're happy.
Justin Norman: Felix is a product made possible by S coins, crypto tokens like USDC or USDT, which are pegged to the US dollar, where one token equals $1. Felix's money movement is a so-called stable coin sandwich. Stable coins moving across borders between fiat payments from the sender and to the receiver. So when I complete my payment on Felix's payment page from my US account, it starts the flow of funds to Mexico via stablecoins.
Manuel Godoy: So there's an interesting component here in which that money from the payment processor back to our account actually takes one day to settle. And that's a problem in the US payment infrastructure, right? It needs to be solved. So what we do, we actually have a pool of funds in stablecoins. Worth one day of transactions, right?
But we have them in a wallet in the us. Once the user confirm the payment, we move that to an exchange. In Mexico, we use Stellar mostly to move the 
Justin Norman: money. Stellar is a blockchain purpose-built for cross-border payments, enabling faster, cheaper, and more energy-efficient transactions than other blockchain networks like Bitcoin or Ethereum.
After the stablecoins are moved. Local exchange partners like Bitso Business enable the off-ramp from stablecoins to Mexican pesos. 
Manuel Godoy: All this  is happening very similarly to the user in seconds. And what is the beautiful part as well is that we enable not only that instant payout, but also all this happens at a cost that is so good to us.
Justin Norman: Blockchain infrastructure enables operational efficiencies that allow Felix to compete on price with its brick and mortar competitors. 
Manuel Godoy: What we've seen is that the crypto rail is about, depends on many things, but between 20 to 50 basis points cheaper than the fiat rail, even at the scale in which we're now, where we can actually negotiate better prices with fiat.
Well, the crypto rail is still much better. And then we find the optimal way to convert it back to pesos, right? So given like right now on a Wednesday at 2:00 PM it can be better to do it one way Friday evening, depend on liquidity. It can be better to do it another way that we're able to pass back the savings to the users in the way of a very good FX rate.
Justin Norman: Before we continue, I want to tell you about the sponsor of today's episode. Rain. Rain is a stablecoin infrastructure company. Their technology allows partners like VE Avalanche, Dakota, and Nomad to move store and spend stable coins instantly and compliantly through global payment cards. On and off ramps, wallets and cross-border rails.Learn more at Rain.xyz.
Justin Norman: Talking to users and spending time on the ground brings to light this tension between where users are today and what is now possible. Due to nascent technology, we can move money around the world instantly with stablecoins. Yet cash is still king throughout many of the receiving countries.
Even in major urban areas, in places like Mexico City, where these food vendors are cash only, while Felix enables payouts directly to recipients Mexican bank accounts, they can also collect in cash at stores like Electra. 
Justin Norman: For as long as cash and local currency is used, stablecoins will need to be off ramped into fiat so that the money can be spent locally and that comes at a cost.
But this raises another question. If we're already using stablecoins to move money across borders, is there a future in which everything stays on chain? 
Farooq Malik: Money needs to be spent in the way that consumers expect to spend it. 
Justin Norman: That's Farooq Malik, the co-founder and CEO of Rain. 
Farooq Malik: Cards and card payment networks have had a 50-year headstart figuring out how to go around the world and roll up merchants and figure out how to get them onto this network to accept payments.
Justin Norman: Rain is a stablecoin infrastructure company. Their stable coin link cards enable users to spend their stable coins anywhere that accepts Visa and that money is converted into local currency for merchants. 
Farooq Malik: We started with cards largely because it was the most technically difficult thing to do, but also because cards gave us the utility to connect Stablecoin, which had very limited acceptance to existing payment rails that have very high acceptance.
I think that in the long term, there's an opportunity to upgrade the underlying infrastructure, and I think that's fantastic, but at the same time, consumers, they don't have the luxury of waiting 15 years or 50 years for every merchant that accepts Visa or MasterCard today to move to a stable coin acceptance mechanism.
There's room in the market, or there needs to be room in the market to create solutions that give the recipient the funds, the flexibility to hold the funds in whatever format or whatever currency they want for as long as they want, so that they can actually transact economically, however they feel like.
Justin Norman: The crypto industry has long talked about onboarding users into crypto, but here in Mexico, along the world's biggest and most efficient remittance corridor, these users don't know that their money is moving With stable coins, the complexity is abstracted away, enabled by technology that feels familiar.
Like WhatsApp voice notes in VR de Niro and credit cards, how this future unfolds will depend not just on users trusting new technology, but on the technology enhancing the experiences that users already trust. 
Money Trails is presented by the Stellar Development Foundation. Be sure to hit that subscribe button as we explore how money moves.