After receiving an undisclosed amount from American Express during its Series A funding round in September 2015, blockchain-based P2P transfer service Abra recently announced a partnership with the credit card provider. By allowing U.S. customers to fund their bitcoin wallets with American Express cards, the startup hopes integration with a well-established payment network will attract new customers to its digital wallet service.
Abra CEO and founder Bill Barhydt expects the new funding option to attract both “cash consumers” and “upper income bank consumers” to the service. The former can buy and reload American Express prepaid cards to fund their wallets and send money, while the latter can use the firm’s credit cards to do so. Though existing funding options already serve these users, greater access to its services will likely increase the startup’s userbase, an important factor for the success of its remittance service.
However, existing funding options for Abra are decidedly cheaper than this new method from American Express, which requires prepaid card holders to register their cards and incurs a 4% fee. Cash consumers can arrange to meet with an Abra teller, like they would hail an Uber, to exchange Abra funds for cash and vice versa. These “human ATMs” set their own fees, which start at 1.5% and will likely beat the American Express fee. Meanwhile, bank consumers can link their bank accounts to transfer money to and from their Abra wallets for free, albeit with a three- to five-day transfer window.
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Regardless of the impact on Abra’s userbase, partnership with a major payment network could lead to future partnerships that firmly establish the startup’s global remittance service. Further integration with other networks such as Visa or Mastercard would enhance legitimacy and lead to an even larger userbase, while merchant partnerships would generate revenue and increase visibility to potential users.