BitPagos CEO and founder Sebastian Serrano recently announced a new feature for their bitcoin wallet, Ripio, at Techcrunch Disrupt New York 2016. In the past, BitPagos has become known in the Bitcoin community by enabling merchants in inflation-riddled countries, such as Serrano’s birthplace of Argentina, to convert credit card payments into bitcoins.

They’ve often been referred to as the opposite of BitPay, which is a Bitcoin payment processor that allows merchants to convert bitcoin payments into local currency within one business day of the sale.

BitPagos’ latest project is an attempt to bring a new type of credit system to the unbanked in countries such as Argentina, where much of the population does not have the ability to shop online. During his presentation, Serrano noted that online commerce accounts for only 2.2 percent of all the shopping taking place in Latin America.

How Does Ripio Work?

Ripio Credit allows its users to pay any bitcoin-accepting merchant in installments denominated in their local currency. After downloading the app, users are put through an application process that involves handing over some identifying information such as a picture of their government-issued ID and a selfie. The information provided by the user is reviewed to determine the creditworthiness of the applicant.

During his presentation at TechCrunch Disrupt, Serrano stated, “This is a very difficult problem, but we have been working on these issues for several years ‒ long before BitPagos.”

Serrano noted that most of the BitPagos team comes from other payment companies in the region such as Mercado Libre. BitPagos is essentially creating a new reputation system to determine whether individuals who usually are not banked (or offered credit) can gain access to credit through their app.

Essentially, BitPagos is making bitcoin payments upfront for their users, while the users are responsible for paying back their purchase via Bitcoin, a bank account or local, physical cash payments.

Why Use Bitcoin?

After his presentation, Serrano was asked to explain why Bitcoin was used at all. Serrano said:

“Bitcoin is, for the merchant, a much better system: It’s instantaneous [and] it has a much lower cost for processing. It also helps us build a [merchant] network that will give a lot more value to the user [from the start].”

As an example of the efficiencies offered by Bitcoin, Serrano noted that Avalancha, a BitPagos ecommerce partner, offers a 10 percent discount for payments made with bitcoin. Serrano explained that the merchant is willing to give that discount because it is a “better network.”

Serrano continued:

“If [a merchant] processes with a credit card company in Argentina, he will get paid a month later in a country that has 20 percent inflation.”

How Will BitPagos Fight Fraud?

Serano also was asked how BitPagos’ new app will be able to fight fraud. Serrano noted that fraud is something BitPagos has been battling against for a long time, and he believes it is not going to be a major issue going forward ‒ mainly due to the company’s experience in the past.

“We know a lot of the [traits] that a fraud user will have,” he said.

Serrano also mentioned that BitPagos’ ability to determine the creditworthiness of a particular user will improve over time as the user’s activity is monitored.

Image via Ripio