A new report by a blockchain-focused research company asserts that there has been a spike in people using cryptocurrencies to send remittances. This growth is in part due to the high costs incurred when using more traditional methods such as Paypal.
Also read: Seven Cryptocurrency Trends to Look out for in 2019
Easier, Cheaper, Faster
The value of remittances being sent overseas from the U.S. is greater than ever. World Bank Data states that over $148 billion was sent abroad from the U.S. in 2017. With an increasingly interconnected world seeing more people than ever moving abroad to work – and send money back home – migrants are looking for easier ways to cut costs and avoid getting ripped off by banks and other middlemen. One effective way of doing so is of course with cryptocurrency. Blockchain research company Clovr has said in its latest report that this new method has become more popular than ever.
The report, named Sending Money Back Home, reveals that of to the 707 people surveyed, 15.8 percent use cryptocurrency to send cash home. This makes it one of the more popular methods, ranking in fourth place after using an online service, money transfer service, or traditional wire transfer.
According to the report, the use of cryptocurrencies is in part due to the high costs associated with using traditional methods of sending money abroad such as Western Union or Moneygram. When money is sent to countries within Africa with these methods, “super-taxes” are often occurred – especially when sending money within the continent. A remittance going from South Africa to Malawi could see fees upwards of 20 percent, for example. Cryptocurrency can minimize such costs. The report notes:
If some of the largest companies in the world, like Microsoft and Starbucks, are comfortable accepting cryptocurrencies as a form of payment, this should instil confidence in using these new forms of payment for sending remittances
There is no doubt that using cryptocurrency to send money abroad can save money, as the report demonstrates by looking at the cost of sending $500 abroad. Banks on average would charge 10.41 percent for such a transaction while a post office could set someone back $34. Using bitcoin core (BTC) or bitcoin cash (BCH) to get money overseas could actually see the sender make money. The report states: “By avoiding the high transaction fees and conversion rates typically associated with transferring funds abroad, you can take a few extra steps (including converting the government-issued currency into cryptocurrency and then back again), potentially getting significant savings.”
Breaking Down The Figures
The report added that men were more likely to have used cryptocurrencies for international transfers than women, and of those interviewed, 85 percent were satisfied with using it as a sending method. The report also revealed that those who weren’t onboard with cryptocurrencies were skeptical because of their lack of knowledge of how they work.
Of the 707 people surveyed by Clovr, most of the remittances were headed to Mexico, followed by China, India and the Philippines. The most important reason for sending cash was so family members could buy food, according to the report, with 41 percent of it being spent to ensure the recipient wouldn’t go hungry.
When governments wreck a country’s economy – as seen in Venezuela – it makes sense for those who have fled their homes to find work abroad and then send funds using bitcoin. As already seen, people from Venezuela are using cryptocurrency to their advantage in order to send money to the cash-strapped South American nation. With the number of remittances increasing, more people are set to learn of the cost-cutting advantages and ease of using cryptocurrency to send money home to loved ones.
What is your opinion on the report and on using crypto to send remittances? Share your thoughts on the subject in the comments section below.
Images courtesy of Shutterstock and Clovr.