Banks and post offices, the two more conventional providers of money transfer services, are the most costly channels, demanding average charges of +11% and +7%, respectively. As transfer costs are high and increase over time, individuals around the world are desiring a cheaper option and have discovered it in cryptocurrencies, the most affordable way to transmit money internationally.
Remittance means money that is transferred to another partaker. In most circumstances, the sender is a migrant and the receiver is a family member back home. Usually, there are a few methods to send money abroad. The primary issues in the existing remittance ecosystem boil down to two prominent factors: cost and speed. Costs may increase and the remittance may take a long time to reach its goal. Conventional money-sending services often demand extra for withdrawals, deposits, and transfers. Besides, they earn money when they transform it utilizing their exchange rate. Usually, the costs charged differ relying on the amount you send and the speed of your money transfer.
International money transfer in any way has hard and soft expenses. Hard fees are announced fees demanding processing transactions and transforming currencies. Soft fees are those that result from the risks that senders and receivers take when depending on third parties to perform transfers. Soft fees, such as currency price oscillations, can be unanticipated and cause unexpected growth in expenses and transaction times.
Some firms permit same-day transfers but for a bit more. So this begs the question: Are you willing to pay more for faster transactions? If you don’t want to spend extra, it’s best to postpone at least a few days for your recipient to receive their money. Even when you choose to transfer money online, you will suffer from the same boring phases, high fees, and slow transfer swiftness. With wire transfers, you have to provide even more data such as account numbers, spend just as much time verifying the transaction, and cost even more than with traditional money transfer services. In addition, banks can occasionally set monetary limitations in addition to these two primary issues, restricting the amount of sending and receiving.
Cryptocurrencies, particularly MakerDAO’s decentralized stablecoin Dai, propose inexpensive methods to reduce the high costs and disadvantages of conventional international money transfers. The advantages of crypto, from the ability of peer-to-peer transfers and the immutability of blockchain technology to the high speed of transactions, the advantages of crypto are revealed by comparing the alternatives.
For most people, cryptocurrency is a method to invest and diversify their portfolios. However, many citizens of developing countries of the world use cryptocurrencies, the purpose of which is remittance and not investment.
Cross-border crypto remittances
Since its inception, cryptocurrency has long been called a solution for the world’s unbanked people. With high exchange rates in most regions of the world and inflation increasing the price of essential needs in numerous countries, cryptocurrencies have appeared as a digital solution. This is mainly due to high bank fees, which averaged 6.5% for cross-border payments at the end of 2020. For considerable appearing economies, where both residents and economies rely on remittances from overseas migrants, these costs are prohibitively expensive. In addition, it takes time to transfer money via intermediaries such as banks. An international payment takes an average of 2-3 days to clear. This hurts when, according to the World Bank, up to 40 percent of some countries’ GDP relies on inflows of remittances. Even unsatisfactorily, these transactions are vulnerable to safety breaches.
Clearly, a secure, efficient, and affordable way to transfer money across borders is very appealing. Cryptocurrency transactions are much quicker than formal currency transfer channels, and their minimal transaction fees outpace systems such as MoneyGram, which have overpowered the remittance market for years, letting them raise transaction costs.
Additionally, for informal migrant employees who are incapable to open bank accounts, or unable to send payments due to political difficulties such as sanctions, cryptocurrency is the only unrestricted solution.
Eventually, sending remittances utilizing cryptocurrencies is very safe. All transactions remain on the public ledger while providing maximum safety for the individuals or entities used. There is also a minimal danger of information manipulation since the information is not kept in a central server but in a massive network of computers or nodes that are continuously scanning and confirming the correctness of the documents. This causes hacking much more difficult, since a hacker would have to breach a large number of servers to collect data, making this way of transmitting remittances the safest, private, and supportable system presently available.
How to transfer money abroad using crypto
For sending money via cryptocurrency, there are many startups and service providers that can support ease cryptocurrency transfers without needing users to comprehend much about blockchain technology. For instance, SureRemit is a cashless remittance service provider that lets clients make cross-border remittance payments with costs ranging from 0-2%. Also, Rebit enables payments to the Philippines, especially from Canada, Japan, and South Korea, and is preparing to extend to the Middle East, while Coins.ph is another firm working in the Asia-Pacific area that works on a parallel model. In addition, the World Bank ranked InstaReM, a digital cross-border payment company established in 2014, as one of the cheapest money transfer providers from Australia and Singapore, with fees ranging from 0.25% to 1.00% which is less than any bank.
Everex, a monetary technology corporation, allows transfers via stablecoins, a kind of cryptocurrency that can be transmitted at almost zero fees and up to 25 times quicker than conventional international money transfers. Bigger corporations such as IBM also join the market. Their experimental international payment system, IBM World Wire, lets partners exchange their funds and money for the Stellar cryptocurrency. IBM Network sponsors payments in almost 70 countries. Although primarily serving corporate customers, it lowers the expense of international remittances for final users.
Besides, Ripple Labs is a renowned firm in this area, with its XRP currency and RippleNet payment network. There are several prominent partners of the Ripple network, including Bank of America. These cross-border payments are proposed to corporate customers, but Ripple lately established Payburner, an integrated payment system that lets customers around the world make XRP payments fast. It can be established as a browser attachment on Google Chrome, making it an easy characteristic in the digital area.
These are only a few samples. The crypto remittance market is growing, so there are some startups to pick from, all with much lower cost rates than conventional banks, and bigger corporations are again entering the industry.
The most profitable Cryptocurrencies to transfer money abroad
The most profitable cryptocurrencies to transfer abroad are those with high liquidity that can be readily transformed into fiat currency and those with low energy fees, i.e. payments created by users to balance the computing power needed for Crypto transactions are processed and validated. One of the most suitable cryptocurrencies for transferring remittances abroad are stablecoins such as BUSD and USDC or USDT (Tether) which you can buy from tabdeal.org. These currencies are pegged to fiat currencies, so inflation is not a problem, and fiat-backed stablecoins are also backed by high liquidity.
Nevertheless, Bitcoin costs are calculated on a per-byte basis rather than a rate, as a result, little transactions can be very expensive.
In addition, Litecoin is much more affordable than Bitcoin, so if you do not want to spend a lot on transaction costs and send money more often but in smaller payments, it can be the most satisfactory option for you. Litecoin transaction costs can be as low as $0.02-$0.03, and payouts take just a few moments. However, Litecoin is less liquid and more difficult to find in cryptocurrency remittance interactions. This also applies to Stellar, which is faster than Litecoin and is not as liquid. Nevertheless, in the end, Stellar could become one of the most straightforward methods to transfer money abroad.
Another prevalent choice is XRP. XRP is on par with stablecoins and Bitcoin for being affordable, quick and safe, and significantly liquid. XRP is mostly traded through Ripple, which means it is very centralized. Although nobody can prevent you from transferring Bitcoin, this story is not real of XRP, which can cause problems relying on the country you want to transfer money to.
Transferring money abroad with crypto has advantages such as cheapness, speed, and security that can arrive in unbanked regions of the world avoids political tension by bypassing sanctions, and avoids problems that impact fiat currencies, such as inflation. However, cryptocurrency can fluctuate. The most profitable cryptocurrency for remittance is Bitcoin, which is even very volatile. Although stablecoins are a favored option, they are not as effortless to transmit, receive or exchange as Bitcoin. If remittance fees are a source of dissatisfaction for you, crypto remittances are an appealing option. Whether or not they are the most profitable method to transfer your money abroad is up to you, but it is a growing industry that will probably even dominate in the end.
