Ripple is currently the second most valuable fintech company in the United States. Ripple and everyone else is now looking for a piece of the $1 trillion remittance market. Ripple’s main goal right now is to allow people to make cross-border payments fast and at a low cost. The remittance industry is gradually growing in volume and the number of active users. Standard remittance service providers, however, charge a lot of money for a transfer process. Due to this fact, it is the time for cheaper alternatives platforms such as cryptocurrencies like Ripple (XRP); and other digital platforms to grab this opportunity.
Indeed, data gathered by the market data provider, Statistica depicts that the total transaction volume of cross-border money transfers; through the internet is nearly hitting $95.96 billion this year. This figure represents a year-after-year rise of approximately 21%. On the same token, the total number of users in this remittance section is approximately 8.5 million users worldwide. These two figures are gauged to rise by the year 2023. The total volume is expected to grow to over $143 billion while the number of users is expected to rise to 13.2 million.
Moreover, the data by Statistica shows that the majority of these digital remittance users are within the labor-active age. About 32% of the users are aged between 25 and 34 years while 25 percent were aged between 35-44 years. In addition, the average transaction per head of digital remittance users is approximately $11,233 annually.
The United States Tops Digital Remittance Chart
According to the data, five nations top the charts of the digital remittance transaction value. These countries include the United States, Switzerland, Saudi Arabia, Germany, and the People’s Republic of China.
High Fees an Opportunity for Alternatives Such as Crypto?
On the same token, the report published by Statistica highlights cross-border money transfer often happens on a regular basis. It adds that most users are not prone to regular change in their transfer service provider. The sector is currently dominated by established players such as banks, money transfer firms such as MoneyGram and Western Union; and post offices. However, all these players tend to charge very high fees to process cross-border payments.
According to Statistica, the relatively high fees charged by the traditional institutions has created a way for other alternatives. Digital platforms such as Worldremit, Remitly, Transferwise that have significantly reduced the fees by optimizing the use of digital infrastructure; become cheaper alternatives.
Ripple Spreading its Remittance Solution to the World
Nevertheless, Ripple has been making developments of late and some of these developments have been positively impacting the XRP market. Ripple has just announced two significant collaborations this month on offering remittance services. Recent developments have sharpened XRP’s price from a $0.2678 low on Feb. 11 to a $0.3288 peak early on Feb. 14.
Furthermore, according to reports, Ripple partnered with Egypt’s largest bank, the National Bank of Egypt (NBE). The new agreement will see NBE open a channel with Ripple to facilitate remittance from Egyptians that work and live in diaspora. The bank claimed that Ripplenet will facilitate its development of remittance business and support transfers from all over the world.
In conclusion, looking at how things stand currently in the digital segment of the payments market, the opportunity for digital currencies to explore is crystal clear. Certain regions such as Africa can benefit significantly from the reduction in transfer fees. According to the study, Africans sent 46 billion dollars to their homelands in 2018