Remittance in Blockchain-Overseas Money Transfer
What is Remittance?
As the world expands, people continuously keep extending their reach to new places for job and earning prospects. This is a general case with the poor workers who migrate to new countries in search of better wages. They need to transfer their earnings to their families back at home, which could be spent for food, transportation and overall living cost. This transfer of money across countries to support their family is known as “remittance”.
Remittance generates huge revenue in the form of transactional charges being deduced from the money sent, which is generally 7.5% of the amount being transferred. East Asian countries alone received $129 billion in remittance in 2017, according to the World Bank. The remittance sector in itself has shown a growth of $585 billion in 2017 itself. Among this $439 billion was sent to developing countries , equating to around 700 million families making a living out of it.
With a growth rate like this remittance has successfully become the major foreign income source for several countries like Mexico. A Forbes report says, Mexico’s remittance payment has superseded their oil industry to become the main source of foreign income.
Money transfers as remittance payment, is a very stable market. The fact that it is more of a necessity to send living expenses to family that makes this industry more stable than any other Private Capital flow of International growth. Remittance industry is thus, a smart investment for major Fintech firms. To increase its user base firms continuously try to decrease the transactional expenses. Last year has seen a total decrease of 7.32% in fees which interpreted into a saving of $90 billion dollars in fees for payees.
The transactional fees for these transfers are high due to the involvement of so many third parties. MTO’s and bank offer these services at a higher rate due to currency conversion rates and account balancing. The market has been majorly dominated by 3 major industries like Moneygram, Western Union and Ria. But newly developed peer to peer or machine to machine technology based organisation such as Bitspark, Transferwise and Micromoney are dramatically decreasing this overhead price and are likely to take market, since people are bound to migrate to a cheaper way of sending money to their families.
Theses new addition to the remittance market have introduce blockchain based remittance system in the game which is the actual reason for the fall in transactional prices. Bitspark is built on the Bitshares platform and thus inherits much of its features. It can perform 100000 transactions per second and fees is as low as a fraction of a cent. It has also led to the created of Market Pegged Assets. Market Pegged Assets are a newly created digital assets whose values track the original values of an underlying asset by means of a secure blockchain, like gold, or platinum. Bitsparks solution is to develop a cloud based platform for MTO’s to send, receive and manage remittance, manage customer support and receive service analytics.
Advantages of Bitspark over conventional system :
Collects 50% fee as opposed to 80% fess from other operators and thus makes the transaction cheaper and guaranteeing a better commission for the MTO.
Based on the cloud and only requires internet connection to operate, so operational costs for the MTO’s are cut.
It creates customer database with KYC during account creation enabling transfer of money in only 15 seconds.
Bitspark has also launched it mobile app Sendy, as a majority of people who send remittance are unbanked worker class of people earning very low wages to afford computers and internet connection. This sect heavily depends on smartphones for such services and thus Bitspark has revolutionized the market by introducing the mobile app.
Micromoney, another remittance providing startup, currently in ICO stage is on the road of becoming Asia’s number one blockchain based MTO. Loans for the unbanked are provided which now amounts to $3,000,000 in loan. It has an enhanced capability to build on the loan worthiness of a user and help him/her taken their first loan within seconds. It analyzes big data of bank records and credits card records for establishing trust over a customer’s creditability. Currently it has major branches at Myanmar, Thailand and 10 other countries. ICO tokens for micromoney also known as AMM are listed in 5 exchanges.
Industry over remittance has transformed to provide room for faster transfer, lower transactional charges and include a broader base of users by introducing mobile apps. Their efforts and the blockchain technology is sure to revolution this industry in a more easy and simple solution for remittance payment and thus would help millions of families all over the world to sustain their livelihood with comparable ease and comfort.
This post was originally cited from the Coincentral.com
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