SoFi Technologies is set to enhance its financial offerings by allowing members to send money internationally using the Bitcoin network, specifically through a system known as Universal Money Address (UMA). This groundbreaking service positions SoFi as the first bank in the United States to leverage the Bitcoin Lightning Network for cross-border transactions.
The launch will initially focus on Mexico, with plans to broaden to other countries in the near future. According to SoFi, this phased introduction is designed to ensure that transfers remain swift, secure, and reliable for all members from the outset.
“For many of our members who routinely send funds to family and friends abroad, facilitating quick, low-cost money transfers is not just a matter of convenience; it represents a significant enhancement to their financial well-being,” stated SoFi CEO Anthony Noto via social media.
Understanding the Transfer Mechanism
The service is anticipated to launch later this year, enabling members to transfer funds directly through the SoFi app anytime, eliminating the need for third-party applications. The charges for these transactions are expected to fall below the national average for international transfers, with exchange rates and fees transparently displayed before finalizing any payment.
The mechanics behind the scenes are as follows:
- US dollars are instantly converted into Bitcoin.
- The cryptocurrency transfers across borders utilizing the Bitcoin Lightning Network.
- Afterward, the funds are converted back into the local currency and deposited into the recipient’s bank account.
This innovative process is made possible by Lightspark, a company constructing a global network that links banks with financial platforms, founded in 2022 by David Marcus, the former president of PayPal. UMA allows users to send money through simple email-like addresses while the Bitcoin Lightning Network manages the payment infrastructure.
SoFi’s Entry into the Global Remittance Market
The international remittance sector is extensive and fiercely competitive, projected to reach a valuation of $740.5 billion by 2024. SoFi’s new international transfer service aims to deliver declining costs and uninterrupted availability for its vast membership base of 11.7 million individuals.
Other financial institutions are already embracing Lightspark’s technology. For instance, Coinbase introduced the Bitcoin Lightning solution in April 2024 and reported that within a year, 15% of Bitcoin transactions on its platform utilized Lightning technology. Additionally, Nubank—a Brazilian neobank—collaborated with Lightspark in June 2024, promising Lightning payments to its extensive customer base of around 100 million, although full-scale implementation remains unconfirmed.
(Image by DrawKit Illustrations)
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