It’s 2019. By now, various business sectors are already looking at the benefits blockchain technology has to offer.
Just to name a few - banking, healthcare, politics, governance, real estate, and security.
And indeed, it comes as no surprise that the international remittance industry which is worth billions of dollars is also turning to blockchain.
Ripple at the Forefront - Like it or not
Headquartered in the U.S., it appears that Ripple Labs Inc. is keen to take the bull by the horns. The company launched its own cryptocurrency – XRP – primarily for use by enterprises.
Banks as well as other financial organizations have already employed the use of XRP as an on-demand and secure funding alternative that gives them quick and easy access to liquidity for carrying out cross-border payments.
The first prominent overseas money transfer company to use Ripple’s technology was MoneyGram.
It started by putting xRapid, a Ripple service, through a testing phase.
Western Union, another major player from this realm, followed suit soon after. It did not take long for Santander, a Spanish bank, to launch One Pay FX, the first mobile blockchain-based app for international payments. It relied on Ripple’s xCurrent technology.
From there it just snowballed: So far, Ripple has partnered with more than 100 financial organizations from the world over. Some of them include UBS, American Express, the Japan Bank Consortium, Itau Unibanco Holding SA, Crédit Agricol, IndusInd Bank, and the Royal Bank of Canada.
Will Blockchain Reduce Transfer Costs?
Most banks are known to charge steep fees when carrying out overseas money transfers.
According to a 2016 report from InfoSys, the average cost of using the services of online money transfer companies is noticeably lower than banks. However, even online money transfer companies tend to rely on banks to function as intermediaries.
Blockchain holds the potential to offer a more cost-effective solution without the need of intermediaries.
Since public decentralized ledgers serve as the basis of cryptocurrencies, just about anyone may send or receive money without requiring verification from third parties.
By eliminating the middlemen, reduced costs is a given.
Wider Reach: Bitpesa as a case in point
Scores of people in developing countries in parts of Asia, South America, and Africa may benefit significantly through blockchain technology because they still remain under-banked.
Since the use of mobile phones is prevalent even in these regions, people can turn to blockchain-based mobile wallets to make or receive cross-border payments.
BitPesa, a digital foreign exchange and payment platform that facilitates B2B payments in Kenya, Uganda, Nigeria, Senegal, Ghana, and Morocco, leverages blockchain settlement for quick and cost-effective payments to and from Africa.
Speed of Settlement
Like we said, traditional overseas money transfer involves the role of banks on both ends, even when you use an online service provider.
Depending on the bank or the overseas money transfer you use, turnaround times may vary from two to five or more days.
Blockchain-based transfers do away with the need for banks, which can reduce processing times significantly. However, it depends on the transaction processing capacity and speed of the given blockchain.
In some cases, crypto transfers can go through in near real-time.
Who’s Made a Mark
Over the past few years, a host of startups emerged that are using blockchain to make international money transfers quicker and cheaper.
Some of these successful service providers include:
- BitPesa (Kenya, founded 2013)
- Abra (Silicone Valley + Philippines, founded 2014)
- Coins.ph (Philippines, founded 2014)
- Circle (US, founded 2013)
An increasing number of overseas money transfer companies are now giving people the ability to make quicker and more cost-effective transfers by relying on blockchain technology.
If the legacy players do not adapt, they may well be let wanting in not too distant a future.
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