More companies seem to be embracing one of Bitcoin’s most useful properties – its border-less functionality. The world’s most popular cryptocurrency can save those wishing to send remittance payments from one country to another a lot of time and money.
Bitcoin Disrupts Cross-Border Payments Industry
Companies like Bloom, Bitspark, Payphil, and Rebit in the Philippines are working towards providing Bitcoin-based, global remittance payment services to more people. Bitspark CEO, George Harrap, explained to Reuters:
“Bitcoin is so much better as a mechanism to send money around the world. There’s a lot less overhead that you need to do.”
Most of these emerging companies do not deal directly with customers. Instead, they are seeking to facilitate transfers for the remittance shops using cryptocurrency. Bitspark are already performing transfers for shops in parts of Africa and South East Asia.
The current business model of such companies does not rely on speculation. Bitcoin is sent from one part of the world to another, and cashed in immediately. This protects the companies involved from dramatic swings in the price of Bitcoin. Miguel Cuneta of Satoshi Citadel Industries spoke of the model:
“We are merely using it as a transfer mechanism. We convert it as soon as possible.”
When using Bitcoin for remittances, the customer receives their cash in less than an hour, rather than the days it would previously take. In addition, they save massively on the fees associated with existing remittance services like Western Union. This saving can be as much as 75 percent.
One Filipino worker living in South Korea told Reuters that she had already saved herself “huge” amounts of cash using Rebit. Kate Corporal continued:
“One thing I can guarantee is that the money I intended to send and the money that my family received was exactly the same… Using bitcoin is really helpful for many Filipinos… as every single cent that we send can be very significant.”
One stumbling block these remittance companies are discovering is that of liquidity. The current value of all Bitcoin is around $160 bn. This is around one-third of the entire planet’s remittance market. This makes it incredibly difficult for local cryptocurrency exchanges to cope with the potential demand for Bitcoin remittance payments. If the entire market suddenly switched to using the services of Bitspark and their peers, the existing exchange infrastructure would be totally overwhelmed. Prajit Nanu of traditional remittance company InstaREM explained:
“As soon as you’re doing $10-15 million a day, liquidity becomes an issue and you’re wondering,‘how am I going to do this.’”
However, despite these futures problems, people like Kate Corporal are enjoying the benefits. If you need to send a cross-border payment, we previously reported on comparison site CompareRemit. They currently list services that use Bitcoin as part of their business model.