Sending money
across borders has long been an expensive and time-consuming process, with
traditional methods such as wire transfers and money orders frequently taking
days and incurring high fees.
The rise of
blockchain technology, on the other hand, has the potential to transform the
remittance industry, making it faster, cheaper, and more secure for users.
In this
article, we will look at the current state of the remittance industry, its
challenges, and how blockchain can help to reduce costs and improve user
experience.
The
Remittance Industry’s Situation
According to a
World Bank report, global remittances totaled $548 billion in 2019, with
developing countries receiving the vast majority of this money. The cost of
sending money across borders, on the other hand, remains high, with an average
cost of 6.8% in the third quarter of 2020.
This high cost
can be attributed to a variety of factors, including financial institution
fees, currency conversion fees, and government taxes. Furthermore, sending
money across borders is frequently slow and inconvenient, with users having to
wait several days for the transaction to be completed.
The
Remittance Industry’s Difficulties
The lack of
interoperability between different payment systems is one of the most
significant challenges confronting the remittance industry. As a result, users
may find it difficult to send money to recipients who use different payment
systems or live in different countries.
Furthermore,
traditional payment systems are frequently centralized, which means they are
controlled by a single entity such as a bank or the government. Users may find
it difficult to access their funds as a result of this centralization, which
may also increase the risk of fraud or theft.
Blockchain
technology still has a long way to go if it wants to be taken seriously as a
Remittance System
Blockchain technology has been touted as a
solution to many of the problems associated with traditional remittance
systems, which are often slow, expensive, and fraught with middlemen.
However, there are concerns that the
blockchain may actually be a bad remittance system design, particularly for
underserved populations and financially and technologically illiterate users.
One of the main issues with using the
blockchain as a remittance system is the technological gap between countries
where the money is coming from and countries where the money is going.
While developed countries may have the
necessary…
