By Yunus Sevmili, CTO/Co-Founder of Almond Fintech
The United Nations estimates that about one billion people are supported in part by remittance payments. In a world where virtually all services have been accelerated and made more efficient by interoperability and telecommunications, international money transfers seem to have been left behind. The reality is that most remittances today still rely on technology and methods that were available decades or centuries ago. This lack of innovation has led to two main issues: slow-moving capital and high fees.
Cross-border payments face difficulties from complex interactions of multiple jurisdictions with different policy and regulatory requirements, such as anti-money laundering and terrorist financing. This lack of adequate financial infrastructure significantly affects users in developing countries, which can lead to long delays. According to data from the World Bank, it takes an average of 69 hours to send $200. Delays in receiving payments can create financial difficulties for recipients who need the money to cover essential expenses.
The other primary issue users face is cross-border payments require intermediaries, which often charge high fees that are not always clear to end-users. The costs associated with the remittances are affecting the livelihoods of the users. For example, the World Bank found that users sending $200 from Sub-Saharan Africa paid an average cost of 8.2%. The majority of remittance users are low-income earners, and the fees they must pay to receive their money can be a significant burden.
There is a solution already available to users across the world: digital currencies. While this use case was overlooked until recently, it is finally getting the attention it deserves. This technology can open the door for users in need. Users can access solutions and exchanges that address some of these problems. The existing global digital currency infrastructure can enable a new era of borderless money transfers.
Moving Capital Through Crypto Across the World
Users across the world are excited about the possibilities of cryptocurrency. One study estimates that crypto adoption skyrocketed by 880% in 2021. One of the most promising applications is remittance payments. Broad access to digital capital and financial transactions facilitated by phone and broadband access can fundamentally change how cross-border transactions occur.
Crypto coins and exchanges have opened up new possibilities and alternative banking routes that allow users to transfer capital in the world instantly. There are cryptocurrencies that are focused on remittance payments. Users can embrace existing crypto exchanges and coins around the world as means to move money globally without the restrictions of the traditional bank-to-bank systems.
This new financial process could be intimidating to users who do not have vast amounts of experience working with technology. Additionally, the inherent volatility of some cryptocurrencies makes them harder to use as a tool for money transfers. However, companies worldwide are developing platforms and solutions that can help facilitate these transactions. Users may be able to simply send capital anywhere in the world as long as they have a mobile phone with internet access.
A future with cross-border transactions is within grasp. Crypto can help financial institutions and users move capital faster with fewer restrictions. When used responsibly and ethically, these tools can help promote equality across the world. Crypto can help people embrace a future where they are not bound by traditional finance’s slow, expensive processes.
Yunus Sevmili is the CTO/Co-Founder of Almond Fintech
Almond Fintech provides financial organizations, such as banks and credit unions, with the blockchain-based infrastructure required to instantly and securely transfer funds to other banks and mobile wallets throughout the world.