SoFi taps Bitcoin Lightning Network to settle cross-border money transfers

SoFi announced it will add Bitcoin’s Lightning Network to its app, becoming the first U.S. bank to use the technology for money transfers. This move lets millions of SoFi members send money abroad faster, cheaper, and with clear fees.

SoFi has partnered with Lightspark, the Bitcoin infrastructure company created by former PayPal president David Marcus, to introduce blockchain-powered payments into its mobile banking app.

This will make it easier for millions of its members to avoid the delays and high costs of sending money abroad using traditional remittance services. SoFi is now the first U.S. bank to integrate the Bitcoin Lightning Network and the Universal Money Address (UMA) system into everyday banking tools.

SoFi touts 24/7 cross-border payments, instant transfers with Bitcoin  

The rollout will begin in Mexico before expanding to other regions where cross-border transfers are common and families depend on steady financial support from loved ones working abroad. The service works by converting dollars into Bitcoin at the current market rate and routing it across the Lightning network. The Bitcoin is then converted into the local currency, like Mexican pesos, once it reaches its destination country and is deposited directly into the recipient’s bank account. 

SoFi is also using the Universal Money Address (UMA) system to replace the complicated account numbers and routing codes with a simple email-style identifier. This way, members can send money by typing in something that looks like an email address instead of copying long numbers or worrying about making a small mistake that could delay a transfer.

SoFi also promised to be transparent and competitively priced to avoid the hidden costs common in traditional remittance services, where providers use poor exchange rates to take extra profits. The company said costs will be below the U.S. national average for remittances for better savings. The service will also be available 24 hours a day, seven days a week, every day of the year, without delays caused by weekends, bank holidays, or limited operating hours.

SoFi leads U.S. banks in using Bitcoin for global payments

SoFi’s Chief Executive Officer, Anthony Noto, said the ability to move money quickly, transparently, and at a lower cost will change the financial lives of many members.

The global remittance industry is valued at around $740 billion. Still, many services that handle international transfers charge high fees, sometimes hidden in poor exchange rates, and take several days to complete transactions. SoFi wants to offer a faster, more transparent, and less costly alternative by adopting the Bitcoin Lightning Network and UMA.

This move aligns with broader trends in the crypto payments space. Coinbase integrated Lightspark’s Lightning rails to provide faster Bitcoin payments on its platform in April 2024. About 15% of all Bitcoin transactions on Coinbase were processed through the Lightning Network within the first year.

As previously reported by Cryptopolitan, Brazil’s Nubank, with over 100 million customers, also partnered with Lightspark in mid-2024 to explore Bitcoin Lightning payments. However, it hasn’t yet fully rolled out those services to its users. 

Analysts say SoFi’s move could pressure other American banks to integrate Bitcoin and blockchain. These banks have avoided Bitcoin beyond offering trading or investment products, partly because of the regulatory uncertainty and risks or speculation often associated with it. SoFi is proving that the technologies have real-world applications that improve financial services instead of disrupting them from the outside. 

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