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remittance market

Bangladesh’s First Blockchain-Powered Remittance Service Is Here

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The British multinational banking and financial services company, Standard Chartered in partnership with Bangladesh’s largest mobile financial service provider, bKash, and Malaysian remittance provider Valyou announced the launch of the first-ever blockchain-driven cross-border remittance service in the country, facilitating instant transfers from Malaysia.

Naser Ezaz Bijoy, CEO of Standard Chartered Bank, Bangladesh reportedly asserted that remittance was an important driver of the country’s economy, contributing vital foreign currency to the national exchequer while supporting the livelihoods of millions of families. He further added,

“With our partners bKash, Valyou and Ant Group, we are delighted to be able to introduce a new-generation technological solution that will make the remittance experience simple and faster, by presenting the service available 24×7, including from the convenience of the remitters mobile phone. We hope this new service will benefit the end-users and contribute to the growing utilization of formal remittance channels.”

The official press release also revealed that the service will be leveraging blockchain technology from Ant Group Co., Ltd which happens to be the financial branch of the Chinese business conglomerate Alibaba Group.

According to the World Bank, Bangladesh was one of the largest recipients of remittance with almost $15.3 billion in 2018. It was the third-highest recipient of remittance in South Asia in 2018. Hence, with this development, Bangladeshi expatriates living in Malaysia can now send money from their digital wallets to a bKash account in Bangladesh through Standard Chartered Bank. The recipients can then cash out from over 200K nearby agent points across the country.

The report stated,

“Malaysia is an important part of this remittance ecosystem. Through this service, the Bangladeshi diaspora in Malaysia can send wage remittance via Valyou to a beneficiary in Bangladesh who is a bKash wallet user.”

Notably, Standard Chartered had previously executed Bangladesh’s first blockchain transaction by issuing a letter of credit for Viyellatex. The whole process was digitally by Contour, a global network of banks, corporates, and digital solutions, utilizing Corda blockchain.

Is High Remittance Charges an Opportunity for Ripple and Crypto?

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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.top 5 states These five nations have a total transaction value of $40.801 billion. The United States tops the chart with a transaction value of $21.297 billion followed by Switzerland at $7.969 billion.

 

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

 

Ripple’s Brad Garlinghouse Claims Remittance Market will Change The Financial State of Immigrants for The Better

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The cross border transaction industry has been on the cusp of glory for a couple of months now. Several organizations, mainstream or otherwise, have taken a keen interest in the growing market.

Ripple, the popular cryptocurrency organization has now claimed that other than expanding economies, the remittance market was also improving the lives of people.

Brad Garlinghouse, the Chief Executive Officer of Ripple was recently talking at the World Economic Forum at Davos where he touched upon the positive impacts of the remittance market.

According to him, changing the dynamic of the financial market to suit the need of every individual should be the number one priority. Garlinghouse added that financial organizations should consider the needs of immigrants too while creating new monetary policies.

The Ripple CEO gave his two cents on the issue of immigrants by stating:

“Those who have the least, pay the most. For immigrants, dramatically reducing the cost of remittances changes the ability for billions to participate in the financial system.”

Cross border payment systems like Ripple are on a mission to ensure that people do not need to worry about their savings just because they are in another country. This fact was also highlighted by Ripple official Marcus Treacher in a new blog. Treacher had claimed that 2020 will be the year where foreign travellers could use their native currencies to conduct purchases in multiple countries.

Marcus Treacher’s comments ran in conjunction with Garlinghouse’s sentiment of helping the immigrants. The Ripple boss was candid in mentioning that the current payments systems were skewed to benefit ‘the man’. This disparity is one of the main hindrances that cryptocurrencies and blockchain technology plans to remove.

Brad Garlinghouse envisions a future where the banking system is much more streamlined and efficient. He also commented on the rivalries between XRP and Bitcoin, calling the latter just a store of value. The Ripple CEO frankly admitted that he did not believe BTC would become a payments standard. He added that buying anything with BTC would be extremely time-consuming.

Conclusion

One of the biggest arguments for the cryptocurrency industry has been its ability to give the power back to the people. At a time when banks are accused of charging mammoth interests on the poor, it makes sense to adopt a system that is all about transferring the capital safely and securely. Comments from individuals like Brad Garlinghouse cannot be pushed away for the sheer fact that the fiat currency model is not perfect. That is also the reason why Garlinghouse has reiterated the concept of partnerships between institutional and crypto organizations.