Transfers are 388x faster and 127x cheaper than through traditional remittance channels.
Blockchain is back in the headlines again thanks to reports of both Facebook and JP Morgan working on their own digital currencies. JPM Coin will be used to handle some of the $6 trillion per day transacted between JP Morgan clients, while Facebook’s coin will be used for sending money on messaging platform WhatsApp. It seems likely that both stablecoins will be used to facilitate cross-border payments, one of the most appealing and achievable uses of blockchain technology.
A better way to do remittances
Due to legacy technology and a large number of intermediaries, moving money from one country to another is a slow and expensive process.
When you consider that payments sent to friends or family abroad, or remittances, make up a sizable chunk of the income of hundreds of millions around the globe, the need for lower costs and faster transfers becomes obvious. So we took a deep dive into the remittance industry to understand how innovators are using blockchain to improve services.
Our report, which you can download from our insights page, looks at the current state of the remittance industry, how blockchain technology can be used for remittances, and what the potential impact of blockchain will be on this industry. To see a full list of the projects we included in this report, check out our cross-border payments markets page.
As a relatively new technology, blockchain innovation can be costly and slow to progress. However, given that annual global remittance payments are projected to surpass $1 trillion by 2022, the potential impact of blockchain here is enormous. Improvements to transfer speeds and a reduction in fees will have a real impact on the well-being of hundreds of millions of people.
Key insights from our report
The global remittance industry is projected to hit $1 trillion by 2022 and $1.4 trillion by 2025.
Based on the compounded annual growth rate (CAGR) for each region since 2000, we project that global remittance outflows will grow by around 12% each year.
Remittance settlement time is 388 times faster on blockchain than traditional channels.
This is based on the average transaction times of a sample of 1800 remittance payments from the World Bank, divided by the average transaction times of selected blockchains that are used for remittance payments.
India, China, Philippines, Mexico, and France made up 35% of total remittance inflows in 2017.
People in India and China receive the highest amounts at around $60 billion each, about double that of the Philippines and Mexico.
Dozens of blockchain remittance companies have been created since bitcoin’s genesis 10 years ago.
The last few years have also seen more established players get into the blockchain remittance game. These brands include GCash (owned by Philippines mobile phone giant Globe Telecom), SureRemit (a spin-off of SureBids, a voucher-based merchant system), and InstaRem (a digital cross-border payment system based in Singapore that is now building on RippleNet).
Our results show that about two-thirds of these startups utilize blockchain technology without their own token.
Most of these companies are building on existing blockchain infrastructure like RippleNet or Stellar; others like Everex are integrating their own cryptocurrencies to transfer funds between parties; Wyre uses its own proprietary blockchain technology to complete cross-border payments. You can see the full list of projects and companies on our cross-border payments markets page.
Big corporations are looking to partner with blockchain startups to empower the evolution of remittances.
MoneyGram and Western Union, two of the market leaders in traditional remittances, are both experimenting with Ripple’s xCurrent. Financial institutions including UBS, Deutsche Bank, American Express, Swift, and Accenture have also partnered with blockchain initiatives to experiment with cross-border payments.
Where do we go from here?
While there are already a number of companies successfully using blockchain technology to process remittance payments, the remittance market is still dominated by a handful of traditional firms like Western Union and MoneyGram. These traditional remittance companies themselves are interested in using blockchain technology for their services, but how will this affect the industry as a whole? Will blockchain bring together disparate actors, ultimately removing centralized authorities and intermediaries? Or will regulatory bodies, commercial banks, and other incumbents continue to be reluctant to incentivize decentralization efforts and maintain the status quo?
Download our full report and view our recent development platform and content marketplace overviews.
About Blockdata
Blockdata offers a new way to understand the digital economy, starting with blockchain. We publish objective information about the companies, projects, products, and tokens that comprise the blockchain ecosystem. It was founded in 2018 by three friends frustrated by the cumbersome process of conducting blockchain research.
For more information, please contact hello@blockdata.tech or request a demo.
