According to the European Commission, every year hundreds of millions of people worldwide send or receive money through a money transfer system or by informal channels, generating some 500 billion dollars in remittances to developing countries. This is roughly three times the size of official global development aid. The EC also estimates that billions could be saved by these users thanks to blockchain-based technologies for remittances. What do international experts say about that? We asked them and have compiled some opinions.
“…Companies like Western Union won’t have a purpose anymore. People can already easily and cheaply send remittances via crypto, but it is not yet widely understood by the public how inexpensive it is and how relatively simple it is to do it. As people start to hear of companies like the Nigerian remittance provider SureRemit (on the Stellar blockchain), or as Dash or Bitcoin become simpler for people to use, remittance services will be displaced, or will have to lower their prices severely to compete.”
“In terms of the fisheries sector, blockchain could change the global remittance industry by establishing conditions for payment. For instance, buyers could include a premium price for a given fish product if suppliers reach a certain threshold for pre-established SPS/TBT compliance, traceability or sustainable-based private standards. Remittance amounts could be scheduled according to the actual level of compliance. Small and medium actors throughout the fisheries’ value chain could receive payment through global remittance based on the overall grade of the product when it reaches the market.”
“It is not the question of whether Blockchain changes the remittance industry but rather how. Let us have a look at a variety of products and services available on the market as well as some of the ideas not yet realized but in the pipeline. The US-company, Ripple, offers a blockchain based real-time remittance service but not only for cryptocurrencies. In the same direction, Mastercard has registered a patent by which clients will be able to choose payments in either well-established currencies, such as USD or Euros or in cryptos. This is to try to combine the world of established payment vehicles with the new world.”
“The global remittance market reached a record high in 2018, according to the World Bank’s latest Migration and Development Brief. Traditional remittance methods have long been ridden by lack of transparency, the middle man and high fees. As a business (or consumer), it can be very costly to send money from a USD account to a non-USD account. For example, if I have to pay a vendor in India, there will be interbank fees of up to 1%, which can be hundreds of dollars. There is an easy way to fix this using blockchain. The sender sets up an account at their local exchange in local currency and the receiver sets up an account at their local exchange in local currency.”
“Along with reduced costs, there are many other benefits of a blockchain-based remittance. For example, it simplifies cross-border payments by reducing the dependence on a number of intermediate entities as in traditional remittance systems. This makes the system less complex and also enables a reduction in transaction delays. As blockchain-based cryptocurrencies are virtual by nature and do not come under the control of central regulatory bodies, there is also the risk of exploitation of these systems. In order to protect customers from such risks, some sort of financial services permission system is also required.”
Check all the news about the relevance of blockchain to international development here.
