For millions of expatriates around the globe, sending funds back home is critical. Remittances — funds sent by workers to their home countries — have become a major source of income for families and communities in many parts of the world.
However, expats who want to send funds to their home countries often face some difficulties such as high fees and long transfer times. Fortunately, crypto is here to make a difference with its remittance solutions.
The Current Landscape Crypto Remittances
According to the World Bank, the global remittance value in 2022 was estimated to reach $626 billion, with some of this amount possibly being used by expat workers to support their families in their home countries. However, despite these huge numbers, there are still challenges when it comes to sending and receiving funds internationally.
Here are some key issues with the current remittance system:
- High Fees: Conventional remittance services often charge significant fees. These fees accumulate quickly, particularly for low-income workers sending small amounts of funds regularly.
- Slow Transfers: Depending on the method of transfer and the destination, it can take several business days for the funds to reach their intended recipient.
How Crypto is Revolutionizing Remittances
Crypto like Bitcoin, Ethereum, and stablecoins (such as USDT or USDC) offer a decentralized, digital form of asset that enables instant, borderless transactions. Here’s how crypto is making a difference:
1. Lower Fees
One of the biggest benefits of using crypto for remittances is the reduction in fees. Conventional remittance services charge significant fees to cover the cost of intermediaries and currency conversion. In contrast, crypto transactions often come with minimal fees, as they bypass many of these intermediaries.
This is especially impactful for those who cannot afford to lose a large portion of their remittance to fees.
2. Faster Transfers
In conventional remittance systems, transfers can take several business days to complete, particularly if the transaction is sent to countries with underdeveloped financial infrastructures. This delay can be an issue for families relying on the funds to meet immediate needs, such as food, rent, or medical expenses.
The transfer speed of crypto offers immediate relief to recipients, particularly in times of emergency.
3. Stability Through Stablecoins
While the volatility of crypto like Bitcoin and Ethereum may be a concern for some, stablecoins offer a solution. These are crypto pegged to a stable asset, such as the US dollar, which means their value remains relatively constant. For remittances, stablecoins like USDC or USDT can provide the speed and low-cost benefits of crypto without exposing recipients to significant price fluctuations.
The Effect on Expat Communities
For expat communities, the impact of lower fees and faster transfers is substantial. Here’s how crypto-enabled remittances are making a difference:
- More Funds Stays with Families: Lower fees mean that a greater percentage of the funds sent by expats reach their families.
- Investment Opportunities: By using crypto for remittance, sender, and recipients also get exposure to other investment alternatives as crypto can also become a valuable asset.
Explore the Future of Remittances with Crypto
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