Cryptocurrency has had a profound impact on almost every industry in the world because of its versatility, scalability, and ease of implementation. As more and more people rely on crypto, the changing and ever-growing remittance industry is no different now, either.
The US is currently the largest source of international remittances after the UK, sending over $56.3 billion in 2015 and over $100 billion in 2019 worldwide. This shows just how quickly the demand for remittances is increasing and how remittance businesses are gaining ground.
One major issue faced by all those who send remittance out is transfer fees, speed of funds being transferred, and most importantly, security. Remittance businesses and banks are looking for newer ways to speed up the remittance process and get a unique edge over the competitors, and the answer lies in crypto merchant accounts.
Using Cryptocurrency for Remittance – How It Works
The US and especially the UK are seeing a rapid increase in the number of migrations. While some manage to come with their family, others aren’t so lucky. Whether it’s an engineer, accountant, artist, or any other professional, they support their families by sending remittances back to their home country.
Remittance is the transmission of currency (usually from one country to another) such that it isn’t tied to any commercial exchange. Remittance may be for family support or be sent as a gift. According to the World Bank, over 800 million people depend solely on remittance income, and the situation left in the wake of COVID 19 suggests that remittance flows will increase significantly by 2026.
The process is quite simple; customers come to remittance companies that accept dollars, convert it into the currency local to the recipient country, and then transfer it to the target account. During the process, customers have to pay the companies’ profit margin, currency exchange fees, bank transfer charges, and taxes (in some instances).
The process can be quite lengthy and take a few hours to a few days to complete.
The Remittance Industry On The Rise: How Crypto Has Improved The Industry
Cryptocurrency comes in to make things easier for remittance companies and those looking to transfer their funds by eliminating the involvement (and therefore fees) of banks. It’s fast, secure, and there are no exchange fees to deal with, either.
In 2018, over 15% of total remittances sent from the US and UK were sent via crypto, a figure that experts believe will soon rise. For remittance companies to facilitate clients and help them make the most out of their currency, crypto merchant accounts need to be implemented before the concept becomes even more mainstream.
Use of Crypto Remittances & Merchant Accounts in Businesses
Cost
There are many reasons why crypto merchant accounts are preferred by customers and many remittance companies, as mentioned above. In the United States, the average cost of sending remittances in the fourth quarter of 2020 stood at 5.22% of the total transaction. This is a considerable amount, especially for people sending remittances to third-world countries.
Some companies also charge a premium (about 10% of total costs) for quicker service, a service that crypto merchant accounts can do faster and with lower costs! The reduced costs represent one of the leading causes for remittance companies adopting crypto and why customers prefer it.
Time
Traditional remittance processes have become very efficient on their own, but there are so much more than bank remittance routes that need to improve upon when compared to crypto. Normally, remittance can take a long time to reach the intended recipient and may require them to physically collect the payment in some cases.
Crypto remittance, however, only needs the confirmation of blockchain to initiate the transfer, which can take no longer than 60 minutes, at most! As crypto technology and merchant accounts continue to get upgraded, this time delay is sure to reduce.
Access to A Younger Demographic
Millennials and Baby Boomers who are favoring cryptocurrency are also joining in after them. The younger demographic group is driving the market, and as they start working and become responsible for their families, they need a quick and reliable way to send remittances abroad.
By implementing a crypto remittance merchant account in your business, you get to cater to these individuals and set an example for future generations. This way, you get to position your company for the future and become a trustworthy name in the industry for the young.
Other Benefits
There are numerous benefits to using crypto payments for remittance purposes, such as;
- Better capital and liquidity for remittance companies
- Accurate revenue tracking and transfer
- Better transparency and, therefore, trustworthiness
- Smooth exchanges leading to an increased customer base
- No need to exchange currency, which further reduces costs
- Better digital adaptation
- Contingency plan for economic down-times, and more.
Traditional Remittance vs. Crypto Remittance
|
|
Crypto Remittance |
Traditional Remittance |
|
How It Works |
Money is received by the remittance company and converted into cryptocurrency – which incurs no fee. This payment is then converted back to local currency at the destination country (again, no fee) and given to the recipient. Crypto payments may also be given directly as crypto, which further speeds up the process. |
Remittance companies accept dollars, convert it into the currency local to the recipient country, and then transfer it to the target account. |
|
Fees (of Total Cost) |
Less than 1% |
More than 5% |
|
Time |
Less than 60 minutes |
More than 24 hours |
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Intermediaries |
No third-party involved |
Banks and exchanges get involved |
|
Security |
Blockchain-secured transaction |
Very little transactional security |
Conclusion
The world is constantly looking for faster and more efficient ways to do everything, whether to mow your lawn or send remittances. In such a world, evolution is inevitable, and those who don’t keep up run the risk of drowning. Companies must understand changing trends and mold their processes accordingly.
Crypto is more than just a trend, though, and when it comes to the world of remittances, it is gaining momentum – fast. Companies must use cryptocurrency for remittance, allowing customers more flexibility soon and invite more clients; before the concept becomes common practice.
If you would like to learn more about how crypto merchant accounts can help you make the most out of your remittance business, its benefits, and considerations you need to make, contact us today.
The post Crypto Payments: How Crypto Remittance is Gaining Momentum first appeared on PaynetSecure.