Advantages of blockchain in the money transfer industry

Remittance settlement time is 388 times faster on blockchain than traditional channels.

As a result of a recent study by the analytical company BlockData, it turned out that remittances on blockchain are 388 times faster and 127 times cheaper than traditional financial systems.

The global remittance industry is very huge: multibillion-dollar transactions are made daily. In 2017, according to a World Bank report, the volume of global remittances rose to $ 613 billion. This figure increased by 7% (from $ 573 billion in 2016) and set a new historical record in the financial sector.

Leading companies operating in the money transfer sector continues to annually receive substantial profits from their activities, acting as intermediaries and receiving their own, sometimes not small, percentage.

For example, TransferWise announced that in 2017 it earned $ 8 million in net income. According to company statistics, 4 million users made monthly transactions worth $ 3.9 billion.

Every year, the numbers are only increasing, and in fact there is a solution that can reduce costs in the field of financial transfers at times.

Blockchain transfers are cheaper and much faster.

Although the global remittance industry is large and well developed, cross-border payments remain the main problem of the industry.

Moving money across borders is a slow and expensive process. Due to the global economic rules, many of which are related to the fight against money laundering (AML), financial institutions must be properly oriented in a complex bureaucracy when processing such payments, observing the norms of international law. It takes a lot of time.

According to the Blockdata research, it turned out that cross-border payments processed using blockchain-based solutions are much faster than those that pass through the traditional financial system. The report states:

The time of calculating money transfers in the blockchain is 388 times faster than traditional channels.

The researchers came to this conclusion after comparing the statistics provided by the World Bank, with data obtained from several of the most popular blockchains. The company used the average transaction time of a sample of 1800 payments from the traditional sector, as well as the average transaction time of the selected blockchains to calculate the total indicator. It also turned out that “blockchain transfers are 127 times cheaper than their“ traditional opponents”.

The trend is changing — entrepreneurs are awared of the advantages of blockchain.

According to Blockdata analysts, entrepreneurs today are intensively creating blockchain-based solutions for the global money transfer industry — the number of companies involved in cross-border payments and using blockchain and / or cryptocurrency technology has been steadily growing over the past decade.

The report mentions the Philippine profile company GCash, the Nigerian SureRemit and the Singapore Instarem as an example. Curiously, most of these firms did not create their own blockchains:

“Our results show that about two thirds of these startups use the existing blockchain infrastructure, such as RippleNet or Stellar,” the report says.

Another important discovery is the realization that traditional corporations are interested in applying blockchain technology to improve their services.

For example, MoneyGram and Western Union are experimenting with the proprietary Ripple’s service, xCurrent. In addition, banks such as UBS, Deutsche Bank, JPMorgan and American Express are also developing money transfer products based on distributed registry technology.

The advantages of using the blockchain are very, very promising:

1)the settlement time takes a few minutes, while in the traditional financial system it can take up to a week;
2)significant savings in money transfers.
The blockchain slowly but surely penetrates into the daily life— this is an indisputable fact that one can always “besiege” skeptics screaming about the imminent disappearance of the cryptoindustry. After all, the blockchain cannot exist without cryptocurrencies.