How Blockchain aims to improve International Remittances

Every year, billions of dollars are transferred as remittance to low and middle-income countries. In the year 2018, the international remittance reached a high of $529 billion, becoming one of the largest sources of external finances for some nation's GDPs.

Remittances are a central pillar for the population in many Asian economies. The World Bank estimates that nearly $450 million was sent back home by migrant workers in the year 2017. It is creating a huge impact on many Asian country's GDPs.

However, around $32 billion in remittance aren’t sent due to the absence of bank account of the recipient, high transaction and regulatory cost. The decrease in value of transferring amount are because of intermediaries associated with cross-border money transfers. The issue can be addressed by the Blockchain technology that offers fast and cost-efficient money transfers in Asian and other world countries remittance industries.

Obstacles are created because the payment of remittance always goes through official banking channels that have to deliver money to the recipient. Hence, majority of recipients do not deal with the bank due to its fees and prefer to receive transactions through informal channels that are more affordable. The blockchain can change that by creating mobile wallets through which people can safely make international transactions eliminating any other intermediaries demanding for the percent out of the amount transferred.

With the mobile wallet, remittance can be viewed in the form of tokens – this removes cash from the transaction and gives visibility and control over how the value is spent. Additionally, tokens are denominated and the amount can be converted in any currency during the transfer without cutting off its value. The whole remittance process takes a place in real-time, making it fast and efficient for both sender and the recipient.

In June 2019 the Juniper Research analysis suggested that this innovation is expected to account for 41% of international remittances by the end of 2024. At the current state we, users, just have to wait and watch how the penetration of mobile wallet supported by blockchain technology will become a catalysis for the international remittances and will also become a solution to boost the financial growth across many capital markets globally.