In this podcast you can hear the experiences of Pablo Urquiza, a born Mexican coming back home from studies in Canada to find out that there was no way for him to use his Bitcoin. Long story short he is now the founder of CryptoFlamingo, a company that operates 5 Bitcoin ATMs in Mexico. When we say that there is 43 in total, this makes for 11.5% of the complete market which is not too bad.
Among other stuff, Pablo touched upon the biggest challenges that Mexican Bitcoin operators can face, so we will focus on these below.
The Regulation
The first challenge Pablo talked about was of course the regulation. He firstly explained how the exchanges are regulated by the Fintech law because they are holding your funds on their servers and are actually in the custody of your money. Since Bitcoin ATMs aren’t storing the user’s money, they are not regulated by Fintech law. Having in mind that Bitcoin ATM is a cash intensive business they need to apply for a permit with the financial investigation unit and the way that work is really unprecise. You would need to draft up the document explaining what exactly you are doing and how exactly are you making all this cash. Then you would need to wait for 10 months or so for them to revise your documents. If they don’t understand, then you will need to follow up and explain in more detail. Only after they are clear on how you make money, they will get your approval.
Apart from this, Pablo says that the legal documentation is written in such a way that it is almost impossible for a person to understand it. Even for him as a financial expert, let alone people with no such expertise. In his words, this is done by those in power in order to stay in power. All of this combined creates an atmosphere where the most businesses in Mexico choose not to obey the law and avoid paying taxes which Pablo wouldn’t recommend.
The Banking
The banking in Mexico is actually easier to arrange than in US or Canada where you have to have the KYC set up, and banks are generally not keen to work with Bitcoin or cash intensive businesses. Pablo explained that he went to the bank expecting to hear some questions about his business and prepared himself for a speech favorable to Bitcoin ATMs, but to his surprise he was never asked. The only important thing for banks in Mexico is that you have the right type of company that is allowed to receive large amounts of cash deposits. Other than that, they don’t care. There is a law that says that if a company deposits more than 15,000 pesos a month it will automatically get investigated to determine the origin of the money, but in reality, it is not enforced Pablo says. That is because Mexico has 130 million people and is the second country in the world by the number of cash businesses. The government simply doesn’t have enough resources to process all of these requests.
The Hardware
As for the hardware Pablo told a story how his first machine was way too old, ugly and was running on Windows XP. It is still operational, but it’s rarely used because it breaks down too often. After that he bought a couple of used machines which are working perfectly for more than a year now. When it comes to buying machines, Pablo would advise to buy second hand because Bitcoin ATMs are made to last, and he would generally recommend General Bites or Genesis Coin.
As for the hardware challenges Pablo explained that the most common, he encountered were the jammed bills or broken cash dispensers. These situations are tricky because you need to act fast in order to get your business going, and there aren’t many technicians that work on Bitcoin ATMs, so he would advise to get a hold of someone that at least has experience with fixing traditional ATMs.
Another interesting challenge Pablo faced was the humidity in Cancun which caused his machine to rust. In this situation his advice is to cover the ATM with different stickers, maybe advertisings, so they can take the damage rather than the device.
The Software
At the end Pablo shared some of his challenges related to software. First of all, he expressed his frustration with the USDC saying that getting their APIs to work on his ATMs is a nightmare that still lasts. In his words they are constantly saying that he needs to wait for an upgrade in order to use it on his models, even if there are the same machines in Mexico that already use USDC.
Even bigger frustration he encountered with a Wallet he used on his machines. As he says, one day they just decided to lock his account and hold his funds, saying that there’s not enough liquidity, although that’s not true. After his complaints, they unlocked it only to lock it again shortly after. This is another ongoing nightmare he is not sure how to handle. With that experience he advises to use only the verified and well-known software.
Summary
After hearing what Pablo had to say we can conclude that every potential Bitcoin ATM operator in Mexico will get his patience tested in the process of regulation. Regardless of that, everyone should abide the law even though it’ can be it’s often not enforced in Mexico. Banking is much easier than in North America, and it’s always good to buy second hand, but have a technician on hand. Use only the verified software on your machines to avoid scams.