El Salvador officially made Bitcoin a legal tender in September of last year in an effort to spur economic growth, save millions of dollars to Salvadorans in remittance fees and offer financial services to more than 70% of the unbanked population in the country. The initiative was led by President Nayib Bukele and included a national crypto wallet named Chivo offering a $30 signup bonus in BTC when a citizen created an account.
“For national projects like Chivo, governments want to ensure that they have a partner who speaks to their citizens in their own language, who can also read their native character set identity documents. It is also critical to both handle massive scale, as well as protect every citizen's identity and security,” said Justin Newton, CEO at Netki. “We are proud to be supporting Chivo in providing financial access and inclusion to all Salvadorans in a fast, easy, and secure manner.”
– Justin Newton, CEO and Cofounder
“When faced with the challenge of onboarding the better part of a country’s population — as Chivo was — attempted fraud is a real and serious possibility,” said Newton. “The key for onboarding is to prevent fraud in a manner that is as efficient as possible while preserving the financial rights of legitimate users as much as possible.”
– Dawn Newton, COO and Cofounder
During its initial nationwide launch, Chivo wallet experienced an overwhelming demand which came with a series of reported issues ranging from identity theft, to blocked accounts and failed transactions. The team quickly determined that they needed a seasoned partner that could handle both the immense scope and the specific security requirements of the project in order to keep their platform working and their citizens safe.
The $30 USD signup bonus offered by the government provided an economic incentive for genuine users, as well as enticing criminal actors. This policy dramatically increased the need to combat against airdrop fraud—a situation where single users would attempt to illicitly create multiple Chivo wallets in order to receive the Bitcoin bonus that was given upon account creation.
The potential risks around adoption were substantial, acceptance by the community, scalability, security and fraud. Chivo wallet needed the right partner to effectively mitigate these risks and increase the chance that the country’s investment would bear fruit more quickly.
Through the use of Netki’s flagship KYC/AML product, OnboardID, the Salvadoran government was able to onboard over four million users within 45 days onto its Chivo Wallet, while safeguarding the wallet from attempted airdrop fraud. Netki estimates that OnboardID facilitated the first-time compliant onboarding of 70 percent of the country’s previously unbanked population onto the Chivo Wallet.
OnboardID has industry leading scale capabilities, easily onboarding more than 4M users in 45 days, and 100,000 users in the peak hour. Even during these large surges in traffic the system was able to complete the full suite of document and biometric checks, as well as sanctions, watchlist and adverse media screens, in 15 seconds or less. .
To truly bank the unbanked, KYC/AML solutions require greater diversity in a multitude of areas. Netki’s solution was built with diversity at its core and can identify any face from any place: it reads more than 5,000 global ID documents, recognizes various native alphabets, offers multilingual support, and is not limited whatsoever by various skin tones.
OnboardID delivered superior results, detecting thousands of fraudulent accounts. The Chivo application today easily manages many more active users than the entire banking sector in El Salvador, and can easily manage more growth, supported by a high degree of automation, where computerized tools replace processes where other platforms require manual intervention by operators or support personnel. This dramatically lowers the staffing costs normally required to support the platform.
The numerous benefits to the nation of El Salvador and its citizens are already coming to fruition – lower remittance fees, ability to make online digital payments, and other forms of financial inclusion for their citizens – and other countries who are exploring similar opportunities are keen to realize these and other benefits, including increases in tourism, foreign real estate investment, foreign business investment, and access to alternative finance such as the Bitcoin Bond.
After suffering from unprecedented fraud levels – in one instance, a singular user created 5,000 accounts – Hedera chose Netki to stop fraud dead in its tracks and grow to scale. Hedera recently achieved a milestone transaction volume of 1 billion in 2021.