Though remittances is expected to grow slow sharply in 2015, as Europe and Russia stay weak, there is still a huge market out there that is waiting for cheap and easy as well as fast international transfer of money. Total remittances in 2014 reached $583 billion which is more than double the official development assistance (ODA) in the world.
Whereas India received $70 billion, Chinese were able to send $64 billion back home. Another major economy that receives huge remittances is the Philippines, it got $28 billion. In line with the expected global economic recovery next year, the global flows of remittances are expected to accelerate by 4.1% in 2016, to reach an estimated $610 billion, rising to $636 billion in 2017.
Nonetheless, remittance flows to developing countries are expected to recover in 2016 to reach $459 billion, rising to $479 billion in 2017. Thus, there is a huge remittance market out there and expanding like never before; however, a lot of this goes to payment processing companies which are exploiting the poor migrant laborers from under-developed/developing countries.
Some economies depend heavily on workers’ remittances as these are a significant part of capital flows. However, as a huge chunk of this capital goes back to payment processing companies like PayPal, MoneyGram, Western Union Money Transfer, etc. amongst others, they are looking for an alternative and Bitcoin looks like a fresh air for them.
Bitcoin Companies in Africa, India, China, the Philippines
Though Bitcoin is nearly six year old financial technology, over the last couple of years, some Bitcoin payment processing companies like Igot, Beam, BitPesa and BitX have come up in Africa; Unocoin has come up in India. These companies have spotted an opportunity to build Bitcoin businesses in the regions that need cheap money transfer options.
It has come to notice that a core cause of high fees for remittances is friction i.e. money moves slowly and inefficiently from one country to another. Additionally, transferring money is expensive because there are limited connections between financial institutions and systems which are now being addressed by Bitcoin.
The digital currency is emerging as a right solution for people who may have to pay up to 10% of the total remittance. Though even in Bitcoin money transfer remittance remains deeply dependent on third parties as banks are still validating money transfers from senders to the remittance operator and again to recipients, it has developed cheaper payment processing.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org