Given the variety of currencies, delivery channels, and counterparties involved, determining the total cost to remit funds in a typical transaction can be challenging for financial institutions. The website BITLQ.NET will assist traders in their bitcoin journey with the best trading tools, fast payouts, and phenomenal customer support. Financial institutions could use it to create two accounts – one for the sender and one for the receiver – on either side of a cross-border transfer, so there would be no need for conversion rates or any other bank fees.
Bitcoin also increases transparency and reduces risk through its real-time transaction recording process. Remittance is a trillion-dollar industry that banks and tech companies are increasingly leveraging to compete in the global economy.
The battle for the global remittance business is on, and the biggest winner could be a new open-source technology: bitcoin (a peer-to-peer electronic currency that is not controlled by any central authority). Recently, Bitcoin has become an exciting development for big tech companies like Facebook Inc., Steam Inc., Microsoft Corp., and Google Inc.
What is a remittance?
Remittance happens when a person or company in one country sends money to another country, typically to a family member or friend. The best part is there are no additional fees involved, and these transactions take minutes instead of hours or days with conventional remittance mediums.
The global remittance market was estimated at $600 billion in 2017, and it is projected to grow by 4.8% annually through 2022 when it reaches $689 billion. The World Bank’s report noted that both developed and developing economies depend on remittances for economic growth, especially for reducing poverty rates. This means the industry’s importance will likely grow over the next few years. The biggest beneficiaries of this vast market are the remittance businesses.
How do remittances work?
Some remittance services also have apps that make them easy to access on mobile devices, while others have partnerships with banks and credit unions that allow you to send money directly from their accounts.
The tricky part is figuring out the right place to send money. Traditional methods involve wiring money to a bank account or wiring funds through a correspondent bank, both of which involve high fees. The cost of remittance varies between countries and the services you use, but prices can range from 0.25% to 2%. In the U.S., banks charge $25 for each incoming remittance and offer a flat rate of $25 for outgoing funds, which is why it’s better to use bitcoin.
How can bitcoin resolve challenges related to remittance?
No international barriers:
Bitcoin transactions are based on open-source P2P technology. With no central authority controlling the currency, anyone can exchange bitcoins with anyone else. In addition to being secure and transparent, this technology has no international barriers, so it’s easy to send money anywhere in the world. Even though bitcoin is currently facing a block size issue and transaction confirmation speed, this issue will be resolved in due time, making it more attractive for remittance services.
Eliminating high fees:
Fees for cross-border transfers can be as high as 15% of the transaction value, so people choose bitcoin instead of conventional methods such as banks and credit unions. As a result, remittance firms can save money on handling international fees and provide a faster, simple, and more secure platform to send money at an attractive rate.
Bitcoin has automation built into its system, which means remittance firms can transfer funds faster without needing as many people to do the work. In addition, since this is an open-source technology, the development process is handled by the community, which means anyone can create new services and apps built on top of this platform.
Bitcoin users don’t need to worry about fraud or identity theft since bitcoin addresses are secured with cryptography, which means funds can only be accessed with a unique digital signature or private key. It’s impossible to make clandestine changes without leaving traceable evidence on the bitcoin database
Even though bitcoin has privacy features that hide the identity of senders and recipients, every transaction is visible on the blockchain network.
Bitcoin transactions are cheaper than remittance transfers, which means financial institutions can use it to pay transaction fees and other costs associated with international payments. In addition, Bitcoin reduces the cost of sending money from one country to another, so organizations can take advantage of its lower costs and increase profit margins.
Increased blockchain benefits:
Since it uses blockchain technology for global payment processing, financial institutions can also benefit from bitcoin. Companies can use this technology for bank-to-bank payments, fund transfers between banks, and securities settlements. The finance industry is increasingly using the blockchain to execute international transactions while reducing costs and risk.
As cryptocurrencies continue to grow, more startups and big companies will use bitcoin to disrupt the global remittance business. This is because bitcoin transactions have a lower cost of sending money worldwide, transparency and privacy, and an open source community constantly improving it.