First came mobile phones and digital money. Now comes blockchain and digital-only currencies to further cut costs of cross-border remittances.
A new crop of startups are taking aim at the $429 billion remittance market dominated by Western Union and MoneyGram, and in particular their high fees — an average of 7.45 percent per transaction (to be fair, those fees have dropped 2.5 percent in 10 years).
Mobile and smartphone-based transfer services have cut costs, but most models still rely on banking networks.
“This is where where the potential of [distributed ledger technology] and blockchain innovation is,” Marco Nicoli of the World Bank told FastCompany.
Blockchain-based transfer services can exchange digital-only currencies, which have not yet gained widespread adoption.
Within five to 10 years “the whole idea of a remittance or cross-border payments will be gone,” says Jeremy Allaire of Circle, a blockchain-based remittance service.
Remittances from family members in wealthy countries to relatives in poorer countries is more than triple the amount of global foreign aid.