BitcoinBusiness & Finance

Bitcoin is Not Harnessing, It’s Replacing Western Union & Remittance Industry

The global remittance stream values at over $600 billion annually and more than 25% of it is sent abroad from U.S. alone. $440 billion were sent to developing countries in 2017 with India topping the list at $65 billion.

The use of cryptocurrencies makes the process error free and trustless. It also allows for transfers in smaller nations possible at ease, without considering the USD. Speaking to BlockPublisher on the relevance of BTC to remittances, COO at online order aggregation platform MarketOrders, Sukhi Jutla said:

Bitcoin was the first use case for payments and financial transactions. Its relevance for the remittance industry is therefore very high and relevant. It’s a proven model and one of the most trusted crypto’s out there.

A big stakeholder in the remittance process is the MTO (Money Transfer Operator) that oversees the transfer to the destination country. A person walks into an MTO and hands over amount at the available exchange rate. The MTO then starts to process money transfer which also takes up some fee for the transfer. The two aspects mentioned are crucial, the exchange rate and the transfer fee.

The MTO is a front end agent and is backed up by RSP (Remittance Software Provider) companies such as Western Union or Moneygram. The MTO and the RSP both combine to charge their share from both the offered exchange rate and the transfer fee. The bulk is taken up by RSP but the MTO wants to get a fair share as well, which ends up as an increment to the overall cost pertained by the user for the transfer. This is known as the “super-taxes” that are catered to at the sole monopoly of these processing agencies and can take upwards of 20 percent in a transaction.

The list of problems with the remittance costs do not end here. RSPs like Western Union and MoneyGram are the only major players in the market. They have a large number of pickup locations and a trusted brand name. They charge no fixed transaction costs and vary their share from location to location.

If the money is to be sent to a country whose currency is volatile and is less traded, Western Union would not have a direct quote with the currency. In this case, the US Dollar serves as a vehicle currency for the transaction. Then, all costs incurred will base on the dollar, instead of the home currency of the destination which further enhances costs incurred to the customer. This remittance structure ensure no transparency for the customer whatsoever and may take days to complete.

There is a need for the remittance industry to do better and to reduce costs. Customers are only persistently involved with it because there is no other option and to send money home is a necessity. But what if there is an option? Que bitcoin.

Built over blockchain, bitcoin not only offers safety of transaction but also ensures the transfer is carried out with great speed. It is decentralized in nature, which means transactions can be validated without any third party involvement like that of MTOs or RSPs. Each transaction is added to a chain on the digital ledger (blockchain) for anyone to see.

To ensure a transaction is fair and original, a consensus mechanism is placed on the network to agree with, before adding a transaction. The process takes place digitally instead of the traditional functionality of MTOs that require permissions and paper work. A small fee is still incurred, but it is nominal as compared to the current system and is justified by the added seamlessness and efficiency to the process.

Many big businesses and central banks have been sniffing around the crypto business for long. This can be identified in the recent efforts JP Morgan Chase, the largest bank in US. They’ve launched their own cryptocurrency earlier this month by the name JPM Coin. It adds to an existent tendency of these institutions to fight bitcoin before coming to terms with it. Mark Moss, founder of crypto trading platform, Signal Profits shared with BlockPublisher;

So while the payment remittance industry is figuring out how to harness the power of Bitcoin and Cryptocurrency to help their business move money more efficiently, what they don’t realize is Cryptocurrency will replace their business more than they can imagine.

SEE ALSO: JPM Coin is a ‘Failed’ Attempt to Redefine the Ideology of Bitcoin & Cryptos

A few blockchain-enabled money transfer companies have also come up such as Bitspark. Bitspark experience for MTOs is web-based, and can operate in a browser tab on any computer connected to the internet. Bitspark is web-based and therefore the MTO requires only a device connected to the internet, eliminating MTO operational costs such as maintenance and installation fees for proprietary software.

Bitcoin gives people sole ownership of their money, without waiting and having to pay significantly to transfer it to their loved ones. Its application cannot be challenged as it makes its way into the trillions of dollars worth in the remittance industry. It only requires more and more people to become accustomed with it and learn about its inherent benefits. Eventually, it will put profitable MTOs and RSPs out of business, and they will realize that they actually helped bringing bitcoin up by putting in place flawed and non-transparent systems. How the remittance industry will not be required when bitcoin comes about? Moss added;

It [bitcoin] will put them [remittance industry] out of business. Bitcoin and Cryptocurrency gives people the ability to transfer money from person to person anywhere in the world for almost free and within seconds. Once people understand this, there will be no need for the remittance industry at all.

Hassaan Malik

Co-founder of BlockPublisher, Hassaan is a technologist at heart with a keen interest in blockchain, cryptos and traditional financial markets. Email:,

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