In the Philippines, a 45-year-old consultant sends money back to his wife and kids in France. In the U.S., a 30-year-old teacher sends money back to her family in Brazil. Without money-transfer services, these families – and millions more like them – wouldn’t be able to financially support their loved ones across borders.
However, the remittance marketplace can be costly, especially as fees rise for each individual transaction. While traditional money-transfer firms have expensive – and often hidden – costs attached to their services, there is an alternative: bitcoins. In fact, bitcoin-focused money transfers could easily prove to be safer, quicker, cheaper and more efficient.
Remittance market continues to grow
Global remittances are common in nearly every country throughout the world. According to a recent report from the World Bank, official remittances to developing countries should reach upward of $440 billion in 2015.
If that number is matched, it would be a 0.9 percent increase on a yearly basis. When looking at the overall remittance picture, including high-income countries, growth is expected to be at 0.4 percent – up to $586 billion in 2015.
Kaushik Basu, World Bank chief economist and senior vice president, referred to remittances and migrants as “major players” in the global economy.
Bitcoin provides an alternative
While traditional money transfers have avoided the digital currency, new options are embracing the positives of bitcoin and using them to the consumers’ advantage.
“Bitcoin provides a cheaper, faster alternative to traditional remittances.”
One example is called Romit, designed by Robocoin. Romit is a remittance software that can be used on smartphones, tablets or computers. The key benefit of Romit for consumers is the reduced fee – locked in at a 4 percent rate. This is thanks to bitcoin’s block chain technology, which forms the foundation of the the currency and allows each transaction to be tracked.
With Romit, consumers never actually deal with bitcoin. They can perform cash-to-cash (with bitcoin in the middle) money transfers with bitcoin working beneath the surface. Previously, ARCA has worked with Robocoin to develop a bitcoin kiosk. The digital currency can be ideal for the remittance market for precisely that reason – it is digital. Therefore, bitcoin-founded remittance systems can avoid certain fees and banking requirements with traditional money transfers.
The low cost is only one way to attract consumers, of course. For bitcoin-based financial systems to grow, more people will have to be comfortable with the currency and its nuances. Through services like Romit, consumers won’t have to create bitcoin wallets or closely watch prices, which makes adapting to the currency much easier.