Photo: Alejandro Machado

Zelle For the People

A Colombia-based startup developed an app that would allow Venezuelans to engage in electronic transactions in dollars without having a bank account in the U.S. Too good to be true?

In this new, apocalyptic Puerto Ordaz, the biggest city of southern Venezuela, there are some things that, no matter how often I keep seeing, will never be normal: vultures watching us from the top of the buildings, people scavenging the garbage (now with facemasks) and people paying with dollars.

There’s something unreal from seeing the banana seller in the corner of the Fe y Alegría school I went to when I was a kid accepting a five dollar bill from the freaking U.S. of A., and giving change.

The way people exchange goods and services in Venezuela has changed a lot in the last year. It seems like Maduro named entropy as the new Minister of Economy and went as far as thanking God for the spontaneous use of dollars in November 2019. Like he was glad he was losing control of the currency people use.

But the problem with entropy is its very nature: people are not only using dollars, they’re using the first thing that sort of works to keep life going. For some, that’s dollars in cash; for others, the Colombian peso, Brazilian reais, or actual gold nuggets, Zelle transfers or a combination of all the above.

Some businesses are taking this a step further and straight up rejecting bolivars, which is discriminatory as hell. Imagine going to a clinic, with your Banco de Venezuela debit card, and being told that you have to have a dollar account in the U.S. to pay because they switched to Zelle now.

Now picture that scenario, but with even more limited options to make transactions in dollars. The alarms are going off in Venezuela, as many Wells Fargo customers have been receiving messages from the bank saying that, starting June 26th, they will remove the option to send and receive Zelle payments. Apparently, the termination of the service is for Wells Fargo accounts domiciled in Venezuela. It isn’t clear yet if other banks will follow, or if it will extend to other Venezuelan Wells Fargo customers. Also, it’s hard to tell if it’s due to overcompliance with sanctions, like the Adobe case (which was solved), or simply an internal decision of the bank because dealing with accounts held by Venezuelans is expensive.

But the point here is that, in this chaotic blizzard, there’s no alternative that works for everyone. 

Or is there?

Last Friday I received a message:

“Hey, we have this new app that allows people in Venezuela to have a dollar account, and we want your mom to test it!”

Imagine going to a clinic, with your Banco de Venezuela debit card, and being told that you have to have a dollar account in the U.S. to pay because they switched to Zelle now.

The message came from Valiu, a startup in Colombia that wants to allow everyone in Venezuela to have access to a dollar account through their phone, no U.S. bank account required. Valiu would let you keep the dollars, send them to other users and, if you need, exchange them to bolivars.

“Aehm, okay,” I reply, intrigued. “But let me warn you, my mom is not super tech savvy.”

“Challenge accepted!” is their answer.

Struggling with the Internets

On top of their grand promises, they’re so confident in their app that they wanted my mom to use it, and specifically told me that I couldn’t help her while they give her instructions via WhatsApp.

I give my mom the WhatsApp contact of Alejandro, from Valiu, and it’s game on. I sit beside her and start taking notes.

Alejandro leads with “Hello, would you like to have a dollar account?”

After a minute of writing and two more fixing typos, my mom answers:

“Sure.”

“Great! To get started, we need your full name.”

“My name is [full name of my mom].”

“Nice to meet you, [Carlos’s mom’s name]. We need a picture of you doing this pose, and another of your ID.”

This is the “know your customer,” or KYC procedure. Because of international regulations, every app that deals with money must have your basic info. I’ve seen this many times, just not via WhatsApp.

My mom doesn’t use a computer and her only contact with the internets is through her android phone from 2016, where she uses WhatsApp and, recently, Twitter.

She’s 57, and even though she’s one of these vampire people that don’t look their age, when she uses her phone, it shows!

Adding Valiu

Given how I’m very into crypto, I’m no stranger to wallet app solutions that promise to help us with our hyperinflating currency and allow us to bypass the authoritarian controls.

Back in November, I went to the Meridian Conference in Mexico City, where I met many people from the world of cryptocurrencies. These guys are well aware that the bolivar is close to extinction, and they’re racing each other to offer the next thing that replaces the void.

Even though they’re based in Colombia, they’re Venezuelan. You don’t have to explain to these guys why a currency based on scanning QR codes wouldn’t work around here.

There are some really good apps out there, and I’ve tried pretty much all of them, but they always had a dealbreaker. Some needed too much memory, some weren’t compatible with older phones, some had a transfer fee that was too high, and some had things like passphrases you have to write in paper (which people don’t want to do), or used a currency that isn’t super stable.

I met Simon, one of the founders of Valiu,  in the conference (Alejandro was there too, but I already knew him from Caracas Chronicles). Valiu stands out to me because, even though they’re based in Colombia, they’re Venezuelan. You don’t have to explain to these guys why a currency based on scanning QR codes wouldn’t work around here.

While my mom struggles to send the pictures, the messages in WhatsApp are piling up. Alejandro is sending the next steps of the process and, since this is a beta version of the app, he wants my mom’s email to give her beta tester permissions to download and try out the app from Google Play.

My mom doesn’t even know she has a “gemail.” I have to help her out with this, as Alejandro explains that this step won’t be necessary when the app launches officially.

Our internet has been specially bad since the quarantine started, so the 13 mb app takes about 30 minutes to download.

When we open it, the first option is to create an account. It asks for a phone number, and then it tells you to wait for a code via SMS.

“SMS is a text message, right?” my mom asks.

The message never comes, so we come back to WhatsApp. We didn’t notice, but Alejandro told her that the codes would be sent via WhatsApp instead, to better protect user privacy. All she had to do was send him a screenshot of the app.

Crossing this bridge takes my mom a while (and I have to help her out again), but once that’s done, the app asks for some basic information like your date of birth, and that’s that. Alejandro promptly sends her $5, and a notification pops up saying that, besides the five bucks, she also has a complimentary $1 in her account, so that’s $6 in total.

My mom is excited, but also not: “Okay, this is great, but how am I going to use these $5? Do they accept these in stores?”

Not Voodoo Magic

That’s a great question. This is the part where most cryptocurrency solutions fail. Your cryptocurrency can have a million cool cryptofeatures, but if I can’t spend it, it’s useless. With so many restrictions in Venezuela, liquidity is probably the hardest feature to pull off.

“Okay, this is great, but how am I going to use these $5? Do they accept these in stores?”

We take a look at the app and it has two options at the main screen: exchange pesos to bolivars, and send bolivars to a Venezuelan account using dollars.

My mom goes to the second option, and the app lets you choose the amount to send. She puts the whole 6$.

The app asks for the name of the person you’re sending money to. She writes down her own. Now you have to pick your bank from a list and write the banking information. 

She hits send and the app says that the money will be in the bank account in three hours, or less.

Turns out, the app works as promised. We didn’t get to try the feature of sending money to other Valiu users, but it seems simple enough, kind of like sending a WhatsApp message.

To people familiar with sending money to Venezuela, this should sound like voodoo magic; the usual process has you converting the money with some trader you found on Instagram or something, and sending bolivars directly. The person in Venezuela always receives bolivars, and never has the power to hold any hard currency, which is a shame, because keeping hard currency is “surviving hyperinflation 101”.

This whole process takes my mom about two hours. After we’re done, Alejandro sends me the invite link so I can try out the app, too. Excluding the half hour it took to download the app, the process took me two minutes.

So yeah, getting a highly functional dollar account in Venezuela can now take you between two minutes, or two hours, depending on how good you are with technology.

And it’s not voodoo magic, it’s just Bitcoin.

Carlos Hernández

Ciudad Guayana economist moonlighting as the keyboardist of a progressive power metal band. Carlos knows how to play Truco. 4 8 15 16 23 42