UK-based remittance firm Xendpay is partnering with Ripple to use its RippleNet global settlements platform to allow it to enter new markets like the Philippines, Bangladesh, Malaysia, Vietnam, Indonesia, and Thailand.
This paper analyzes remittance operations with and without cryptocurrency and blockchain technologies in general and present pros and cons of Libra for cross-border payments and money transfers. We also present a brief discussion on challenges posed by global cryptocurrencies to central bank governing bodies all over the world and policy implications arising out of potential conflicts between sovereign currencies and future of global cryptocurrencies such as Libra.
Ripple has partnered with Intermex, which will leverage RippleNet to develop faster, transparent cross-border remittance services between the U.S. and Mexico. It will also give Intermex access to Ripple's XRP-based On-Demand Liquidity (ODL) service as a real-time bridge between sending and receiving currencies.
Vietnam ranks second in terms of cryptocurrency use, driven by remittance payments, according to a recent survey by a global provider of market and consumer data Statista. Statista's survey findings showed that 21 per cent of respondents in Viet Nam said that they used or owned cryptocurrency in 2020, the second-highest rate among 74 surveyed countries. Viet Nam came after Nigeria where almost a third said this applied to them.
Sending money home can be an expensive business. But it doesn't have to be. Digital currencies offer the possibility of lower fees, giving rise to more frequent and cheaper transactions. This has implications for the FX world, particularly the dollar.
According to Statista, reliance on remittances and the prevalence of P2P phone payments have led to a steep rise of cryptocurrency use in Nigeria. Almost a third of Nigerians said this applied to them. Recently, businesses in the country have been adding crypto plugins to their phone payment options, adding another way in which Nigerians can use cryptocurrency in their everyday lives. The second and third highest rates of cryptocurrency use in the survey were recorded in Vietnam and the Philippines, respectively. Again, remittance payments play a role in the widespread use of cryptocurrency.
UAE-based RAKBank is expanding its remittance routes using RippleNet blockchain technology. RAKBank and Bangladesh-based Bank Asia have partnered to allow users to transfer money between accounts at the two institutions within 24 hours. The announcement doesn't specify whether the service utilizes XRP, which is an option for RippleNet users.
Southeast Asia's digital economy has remained strong and, adding 40 million people into the online space this year, as usage of digital financial services has jumped significantly, according to the e-Conomy SEA 2020 report by Google, Temasek and Bain & Company. Usage of mobile banking apps rose across all Southeast Asian markets with Vietnam, the Philippines and Indonesia recording the strongest growth rates in monthly active users. Online remittances jumped by nearly 2x, and digital remittances app downloads players such as TransferWise surged 1.3x. https://economysea.withgoogle.com/
So how are stablecoins being regulated in the U.S? One of the many frameworks that has been adopted is existing state-based money transmitter law. The biggest stablecoin - USD Coin - is issued by Circle Internet, a company that is licensed by around 40 different states to transmit money. Oddly, this is the same regulatory framework that applies to old school remittance companies like Western Union. If you've never made a remittance before, here's how it works. A retail customers temporarily hand over a small amount of money, say $200, to a Western Union agent. The agent contacts a foreign Western Union office and tells them to provide cash to the customer's friend or relative. In the early 2000s this money transmitter framework was expanded to cover the likes of PayPal. Whereas Western Union keep customer funds for an hour or two, tops overnight, customers of PayPal keep balances in their wallet for months, even years. This storage function means that PayPal is doing something quite different than Western Union.
In the long run the answer to the high cost of remittances is a shift away from expensive cash-based systems and a bypassing of banks and transfer firms altogether.
A rapid shift towards digital payments can improve cost, transparency and convenience for billions of consumers. International cooperation is needed to support technological capacity in developing economies, ensure interoperability between national systems, enhance cross-border payments and remittances, and support financial inclusion - in short, to avoid spatial and social fragmentation.
The Central Bank of Nigeria (CBN) is incentivizing citizens to use licensed international money transfer operators (IMTOs) to send and receive money with its "Naira 4 Dollar Scheme". In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional 5 naira per USD received. https://www.cbn.gov.ng/Out/2021/CCD/naira4dollar.pdf
Bank Negara Malaysia and the Bank of Thailand launched a cross-border QR payment linkage between Malaysia and Thailand. Under this first phase, users in Thailand can use their mobile payment applications to scan DuitNow QR codes to make payment to merchants in Malaysia. Under phase two, users in Malaysia will be able to use their mobile payment applications to scan Thai QR codes to make payment to merchants in Thailand. The last phase of the linkage will be expanded to include cross-border remittances.
"Your own personal estimation for whether to go with a traditional remittance or stablecoins will differ from mine, of course, depending on how cheap your local cryptocurrency exchange is (as well as that of your counterparty), and the availability and price of options like Wise or Western Union. Just make sure you include all stablecoin-related fees so that you're not mistakenly comparing apples to oranges. Stablecoins don't work for me, but they might for you."
"This BIS paper aims to shed light on current conditions in international remittances and challenges from a financial inclusion perspective. The paper takes stock of such conditions and attempts to pinpoint areas where progress has been most challenging. It also identifies reasons for remaining obstacles and highlights ongoing initiatives to address them. The analysis draws on a unique set of information sources, namely the assessment reports by the World Bank - which are usually not published - and the Financial Action Task Force's mutual evaluation reports."
Cryptocurrency exchange Coinsquare is launching a stablecoin pegged 1:1 to the Canadian dollar. The exchange plans potential roles for its new "eCAD" token in cross-border payments and remittance, peer-to-peer lending, merchant payment solutions, as well as trade settlements and forex conversions.
On average, it costs 9.3% to send the equivalent of $200 to the Africa according to a new World Bank report. However, the cost drops by as much as 90% when money is sent through cryptocurrency-based fintech companies like Bitpesa.
For Latin Americans living abroad sending money back home via traditional banking methods and money transfer operators can be a complicated and costly ordeal. More cost-effective approaches rely on using fintech, like mobile banking, according to a recent IMF working paper.
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