Today public blockchain Celo announced that it raised an additional $20 million bringing total funds secured to $65 million. The latest round included investors Andreessen Horowitz, Greenfield One, and Electric Capital. Previous backers included Linkedin’s Reid Hoffman, Twitters’ Jack Dorsey and Coinbase Ventures.
Last year Celo created a 50 member Alliance for Prosperity with the goal of financial inclusion. Today it also announced the launch of Valora. This mobile remittance app costs as little as one cent a transaction, firmly targeting the global remittance market where the World Bank estimates an average remittance cost of 7%.
“When we first began supporting Celo two years ago, we saw the opportunity to build a ‘full stack’ global payments platform that anyone with a smartphone could use to send, receive, and store money,” said Katie Haun, General Partner at Andreessen Horowitz. “Celo can dramatically reduce fees and fraud while also making payments instantaneous and global.”
Valora: International remittances for less than a cent
One of the first to use the app is the NGO, Grameen Foundation, a microfinance organization. It’s active in the Philippines and wanted to help people who lost jobs and income due to COVID-19, putting them below the poverty line. It decided to target 3,500 women to provide digital access to grocery and medical packages and vouchers for their household needs and business sustainability.
The money was sent using Celo’s stablecoin, the cUSD, and beneficiaries received the pesos equivalent. On the whole, the experiment was successful. For one batch of payments, 98% of recipients successfully downloaded the app. The failures were because of outdated phones or poor internet connections. Phone support was provided, which was not insignificant at 19 minutes per download.
Typical remittances to the Philippines cost 2-3% because it’s a high traffic corridor. But in this case, the cost was less than one cent per transaction, a 99.5% reduction, and the payments were completed in minutes.
The biggest challenge proved to be the digital wallet aspect. A 24-word security phrase was required in English. 1.5% of users lost access to their funds because they couldn’t recall the passphrase, but the Celo Foundation reimbursed them.
However, a key takeaway was that many of the recipients expressed an interest in using the app to send funds to family or to use it within their stores. “For them to trust the technology more, it needs to be as close as possible to the ease-of-use and credibility of cash,” reads the Grameen blog post.