Developed countries’ remittance fees when sending money to their families in developing countries are double what they were a decade ago. Websites such as https://bitcodemethods.com/ meet the needs of both experienced and novice bitcoin traders with their user interface and strategies. The platform has paid extraordinary attention to detail while designing its user interface. It is due to two main factors; first, there is a decreasing number of jobs available in developing nations, and second, there is a dramatic increase in the use of mobile banking.
The below-mentioned portion will explore the prevalence of remittance fees among migrants, why these fees are so significant for those with less financial means, and how Bitcoin promises to mitigate these costs. Next, we’ll delve into the demographics of remittance market participation from the developing country perspective and review who’s using Bitcoin to send money back home.
Migrants worldwide pay high fees when remittance companies transfer funds back to their families at home. The World Bank found that some families pay $35USD a month in sending and receiving fees, on top of the $5USD-$7USD per transaction they have to spend on coins (the physical unit of account). The World Bank’s report also indicates 200 and 400 million migrant workers worldwide.
A total of 20 countries are said to have remittance fees of greater than USD 1 per transaction, with many reaching over USD 5. The United States is the most popular for sending money abroad, followed by Europe.
The dramatic increase in mobile banking is a central factor causing this dramatic change in remittance fees. The World Bank’s research indicates that “three-quarters of non-bank mobile money users in developing countries do so for people who have low or no access to bank accounts.” In addition, as of 2011, over 2 billion people had mobile phones, half of which were smartphones.
These migrant workers now have banking services on their phones, which allows them to send money home through mobile remittance apps. These apps essentially piggyback off the existing mobile payment infrastructures in the developing world, and that’s where the big players are focusing their efforts.
A report indicates that “the market leader Western Union has an 18% market share in terms of transaction value” and “transaction value continues to be dominated by small transfers of less than $200.” These are the actual transactions. Bitcoin remittance companies want to attract. Western Union is leading the charge in mobile remittance, with a projected USD 500 billion transactions in 2022 alone. Bitcoin hopes to compete with Western Union and offer a cheaper alternative for these minor household transfers.
How can bitcoin resolve issues related to remittance fees?
Bitcoin’s potential in mitigating remittance fees is decentralised, allowing individuals and companies to transfer funds without a third-party intermediary or costly fees. Bitcoin allows for almost instant transactions, and the massive amount of users using it provides the network with the financial resources necessary to support the payment transfer process. The low transaction fee associated with Bitcoin relative to other methods of transferring money will help push adoption among migrant workers seeking a cheaper alternative to remittance fees.
El Salvador uses bitcoin to mitigate remittance fees:
The remittance payments flowing into El Salvador are predominantly in U.S dollars (USD 1 billion per year). Yet, there’s a need for payments in local currency because residents want to save their dollars or use them to purchase goods or services in their local economy. Currently, a lot of the time, that’s not possible because the local currency exchange rate is too high.
The high U.S Dollar rate has to be paid by El Salvadorian families to the intermediaries who act as currency exchange agents. That’s where bitcoin is helping them out; it helps El Salvadorian families save their hard-earned money, and it will make it easier for them to make purchases in the local economy.
Bitcoin does not have banking fees:
Bitcoin has no transaction fees, meaning that the remittance companies are not taking a lot of money from those sending money, especially in the developing world, where many people don’t have bank accounts. With banks and mobile phone banking, you often have to pay checking deposits and withdrawal fees.
The Bitcoin network’s innovative technology is helping to bring more positive changes all around the globe:
The Bitcoin protocol does not require a third party to hold funds in escrow until the transaction is complete; this brings out another high cost of remittance payments. The Bitcoin blockchain also allows for payments to be made in real-time, and that’s important for migrant workers who want to get money back to their families quickly.
There is an infrastructure that needs to be built up for the world to adopt Bitcoin:
International banking regulations and local currencies need to be embraced by the world’s more developed nations before the world can begin adopting Bitcoin for remittance payments. El Salvador was the first country in the Western Hemisphere to introduce this innovative new technology into their financial system with its government-approved Bitcoin remittance platform.