Dive Brief:

• Coinbase is partnering with Remitly to push deeper into the U.S.-Mexico international money transfer business, the crypto exchange said in a blog post Tuesday.
• Coinbase has long allowed customers to send crypto internationally. But for the first time, recipients in Mexico can use the Coinbase platform to cash out their crypto holdings in pesos. 
• The new service is free until March 31, after which date customers will be charged fees that Coinbase estimates are 25% to 50% "cheaper than traditional cross border payment solutions."

Dive Insight:

The biggest crypto exchange in the U.S. is elbowing into one of the largest remittance corridors in the world. 

Money transfers between the U.S and Mexico have skyrocketed during the pandemic, increasing 37.7% between November 2020 and 2021, according to BBVA.

But Coinbase faces stiff competition from other firms in the business of cross-border money transfers, and new entrants continue to materialize. 

The crypto exchange must compete with industry stalwarts like Western Union and MoneyGram, and fintechs like Revolut and Ripple.

And as the flow of money picks up between the U.S. and Mexico and in other remittance corridors, a diverse array of businesses are focusing on remittances with renewed vigor. 

In October, Facebook (now known as Meta) launched a pilot of its digital currency wallet Novi among users in the U.S. and Guatemala, perhaps paving the way for the company to make further inroads into the remittance business. 

Revolut last month announced it would slash fees and accelerate the speed of money transfers between the U.S. and Mexico. Customers can use the Revolut app to send up to $1,000 to bank accounts in Mexico per month without incurring a fee. 

MoneyGram, meanwhile, is seeking to capitalize on a post-acquisition boom. Private equity firm Madison Dearborn partners said Tuesday it would buy MoneyGram in a $1.8 billion deal, according to Reuters.

Coinbase is muscling into a highly competitive space. 

Now, when Coinbase customers in Mexico receive a money transfer, they are given the option to keep their funds in the various cryptocurrencies supported by the exchange, or to generate a redemption code that can be used to receive cash at a physical location.

Coinbase has partnered with Remitly to offer customers in Mexico the ability to cash out their holdings into pesos at 37,000 retail locations and convenience stores across the country. 

"Coinbase’s mission is to increase economic freedom around the world, and this new product is core to enabling that mission," the company said Tuesday. "And while we’re starting in Mexico, over time we’ll consider other regions where customers face similar challenges."