The remittance industry is observed as one of the ripest for disruption given the high costs that currently exist within traditional remittances.
Money sent home by migrants accounts for one of the largest financial inflows in developing countries. In a world where the internet has opened up human communications and transactions, offering borderless solutions across the globe has become an essential aspect of human and economic relationships.
These relationships necessitate the need for monetary communication vehicles, whereby individuals and companies can send payments from one country to another, albeit at a cost. Of the several traditional remittance providers in existence today, one of the most popular within the industry is Western Union.
Shortcomings of traditional remittances
Despite its popularity in terms of global reach, users criticize the high cost of sending money through companies offering the service, including Neteller, Halifax, HSBC, and Moneygram among others.
With varying costs of transactions, global coverage also remains a challenge for some of these remittances. Therefore, the promise of global reach and near zero cost of transactions makes blockchain-based remittances appear as a major disruption for the remittance industry.
Jason Cassidy, President of Crypto Consultant, tells Cointelegraph:
“The absorbent fees charged by traditional remittances, such as Western Union on many payment corridors, leave room for new entrants to offer better rates across the board.”
According to Cassidy, Blockchain technology in the remittance sector is developing at a very fast rate. New creations on top of the Ethereum Blockchain have the potential to make a real impact, as is already being recognized within the mainstream FinTech environment.
A number of remittance companies within the Blockchain ecosystem are currently serving individuals and companies across the globe:
Bitpesa: This company offers bitcoin-oriented mobile payments to various African countries. As of right now, the service is active in Nigeria, Tanzania and Uganda, with claims of future expansion. BitPesa also maintains to cover over 85 countries around the world and has processed over 17,000 bitcoin transactions so far.
Bitspark: Attests to offer cash out services at over 100,000 locations around the world and prides itself upon servicing the Asian regions, with a strong focus on Indonesia, Pakistan, Vietnam and the Philippines.
Everex: This company focuses on offering blockchain based microlending, remittances and merchant payments to underserved individuals and SMEs in Asia and globally. The company is one of 15 to be recently nominated for the 2017 Remittance Innovation Awards (RemTECH).
While acknowledging the award nomination, the company’s CEO, Alexi Lane, noted that Everex does not want to be perceived as only a remittance company where transactions can go unnoticed by the financial system.
“We use our technology to put national currencies on the Blockchain, where financial records create a public credit history for the underserved. Like credit card transactions, Blockchain records show how much is spent, so we can apply AI and machine learning to analyze the data and come up with the loan rate to offer the user.”
Recognition is good for blockchain remittances
Acknowledging the significance of the development of Blockchain-based remittances, as well as their recognition by the mainstream financial environment, Jason Cassidy informed Cointelegraph that the recognition should speak volumes, not only to industry players but also the mainstream audience.
He noted that a large percentage of the global community will end up sending or receiving money via remittance, so being recognized is a huge step towards introducing Blockchain technology to the masses.
Christopher Franko, the founder of Expanse, believes that having Blockchain companies excel among their conventional contemporaries is indeed a positive development for the industry as a whole.
On the matter, Franko states:
“It is great to see Blockchain companies winning Fintech competitions because remittances are where Blockchain tech really shines the most.”