A Blockchain Remittance Service
A remittance is a fund an expatriate sends to his or her country of origin via wire, mail, or online transfer (www.Investopedia.com). According to a World Economic Forum report, remittance totaled more than USD$714 billion in the year 2019 (www.weforum.org). Remittance has a significant impact on the economies of developing countries and affects the lives of millions.
The World Bank estimated that the average remittance amount is USD$200 with a cost of 5-10% and takes an average of two to five days to settle. The key reasons for the high charges and inefficiencies are old technology, poor infrastructure, regulations, and interoperability problems. (www.coinpip.com)
The financial, economic and social value of this system
The blockchain technology’s decentralised ledger, immutable records, and inherent security through cryptography seems a perfect solution to the problems.
Every five percent of transaction cost saved equals to more than USD$35 billion per year of money that go into the hands of people in the developing countries that need the money. Beyond the direct cost-saving, the almost real-time transaction and the assurance of security are likely to motivate the migrate workers to transfer more money back to their home countries. This will speed up the development of their home country’s economy. Given better resources, the human capital in these countries, especially the children of these workers will have a better chance of development and over time lead to a more productive society.
In the longer term, it is likely to encourage the flow of people from developing countries to the developed countries. Barring political challenges, the economic impact of such worker movement will be hugely positive. The home countries will benefit from greater access to financial resources while the destination countries will benefit from the human resources boost that translates to higher economic growth.
Socially, the elimination of friction, high cost, inefficiencies in the money transfer system will lead to greater peace of mind for these workers as well as save them time that can be channeled to more productive use.
We believe that the remittance industry with its deep-seated inefficiencies represents a golden opportunity for building new blockchain-based infrastructure and a new business model. The huge financial, economic, and social value will translate into a compelling investment opportunity.
According to a World Bank Group report, the global market size for remittances is $613 billion in 2017 (www.worldbank.org). The world market for remittances has been on the rise for the last 15 years: