Blockchain Technology Enables Uphold To Offer Free Money-Exchange Services

With a mission to offer as many free, or cheap, money-exchange services as possible, Uphold, a virtual funds and commodity platform, on Wednesday launched the first of a four-phase effort to expand its reach among consumers, merchants, charitable organizations and software developers.

Uphold, the new name of Bitreserve, an 11-month-old company based in Charleston, S.C., with offices in Shanghai, London, San Francisco, and Braga, Portugal, provides cloud-based exchange services. Uphold enables consumers to hold and send money for free based on funds held in an Uphold account, which now can be funded via a bank transfer, credit or debit card, or Bitcoin. Prior to today, Bitcoin was the only accepted funding mechanism.

Uphold now enables bank transfer, credit and debit card account funding to consumers in 33 European nations. That’s the first phase of the Uphold rebranding effort, Anthony Watson, Uphold chief executive and president, tells Digital Transactions News.

Subsequent phases include a November expansion of the bank and card funds transfer to Uphold users in the United States and China, followed later this year with partnerships with Visa Inc., MasterCard Inc. and Discover Financial Services to enable users to use physical and virtual payment cards that are funded by their Uphold accounts. The final phase, in early 2016, is opening all of Uphold services to consumers in India.

Watson says the card program will involve multiple issuers, but he would not disclose who they might be. “The cards are directly tied to funding in an Uphold account,” he says. “We’re not offering consumer finance. Everything is based on the value of the funds you hold with us.”

Though Uphold, under its Bitreserve name, solely relied Bitcoin for users, that digital currency was the not real innovation for the company, Watson says. That is reserved for Bitcoin’s underlying blockchain technology, an electronic ledger of all activity that many payments executives see as having wide new uses. “Blockchain technology fundamentally, undermines the legacy, fractured system we’re forced to use today,” Watson says.

For the most part, Uphold’s services are free. Users join at no cost, and can fund their Uphold accounts from any bank in an approved area for free. Consumers using a credit or debit card to fund an Uphold account pay a 2.75% fee. Two Uphold members can transfer funds for free with no minimum or maximum limitations.

Watson says Uphold charges no foreign-exchange fees for buying, moving or converting funds from one supported currency to another.

Charities using Uphold, and donations made to charities from Uphold accounts, always carry no fees, Watson says. “It’s fundamentally wrong and disgusting that money transmitters charge charities to send money around the world, when fundamentally those fees come out of donated money,” he says. “We’re going to remove all those fees.”

Businesses may appreciate Uphold’s pricing strategy, which Watson says is about 80% cheaper than most banks. Some, like a ride-sharing service, may need to pay drivers in multiple countries, but doing so conventionally incurs fees for what is a relatively small transaction, he says. “We take away the cost of drivers, and make the treasury function of a company act in real time, transparent and free,” Watson says.

Uphold charge fees to its users who withdraw more than the company’s annual limits. In Europe, Uphold users can withdraw up to 10,500 euros ($12,003) annually without paying a 0.5% fee.

Essentially, Uphold will make its money from volume, Watson says. “This is a volume play,” he says. “Our proposition is based on doing good in the world.”