Crypto Finds Growing Acceptance In Remittances

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This summer, UNICEF invested Ether in eight startups aimed at using cryptocurrency and blockchain technology to pursue its goal of increasing financial inclusion for some of the world’s poorest people.

The investment of 1,000 ETH in companies from Argentina and Mexico to Nepal and Rwanda by UNICEF CryptoFund is just one example of the widespread use of cryptocurrency to promote financial inclusion and the seriousness with which its potential to do good is viewed by experts on the ground.

In April, the Huobi cryptocurrency exchange pledged $ 1 million to the fund.

Remittances lead the way

The use of cryptocurrencies focused on cross-border payments like Stellar’s XLM, Ripple’s XRP and Celo’s CGLD to make remittances faster and more affordable is growing rapidly, according to a September study by PYMNTS and the Stellar Development Fund.

Read more: New study: Crypto emerges as preferred form for cross-border remittances

Nearly a quarter of all U.S. consumers making cross-border peer-to-peer (P2P) payments, according to a survey of 2,079 senders, sent funds using cryptocurrency, and half did. from a mobile wallet.

There is a good reason for this. The average fee paid for international remittances is almost $ 15 – and remember that remittances tend not to exceed a few hundred dollars – and recipients waited an average of 2.4 days to receive. these funds. The cost of P2P crypto payments starts at a fraction of a cent and doesn’t increase much from there. And transfers are almost instantaneous.

See: Cryptocurrency users more likely to use mobile wallets in cross-border remittances

“From sending money home across borders to donating to a humanitarian organization, we want to make sure that the money gets into the right hands, not into the pockets of a middleman,” he said. Celo founder Rene Reinsberg last year as Celo announced their mobile crypto. Payments-focused Alliance for Prosperity which includes over 100 crypto companies.

See also: Financial inclusion and crypto to boost technology in a digital-first world

This is why remittances are such an important use of crypto. It is also a big industry, with American consumers sending $ 76 billion overseas each year. The pandemic has increased that number, with 60% of senders increasing their payments.

Download the study: The Digital Currency Shift: The Cross-Border Remittances Report

Embrace crypto

Stellar caused a stir in October when it announced a partnership with international payments firm MoneyGram, a major player in remittances, to send Circle’s USDC stablecoin for cross-border payments.

“Thanks to the reach of MoneyGram’s services and the speed and low cost of transactions on Stellar, a new segment of cash users will be able to convert their money into and out of USDC, giving them access to banking services. ‘fast and affordable digital assets that may have been previously out of reach,’ Stellar CEO Denelle Dixon said at the time. “We are delighted to partner with MoneyGram to continue our mission of creating more equitable financial access. “

Of course, it’s worth noting that using crypto for cross-border payments doesn’t just benefit money transfer users. Sending a payment of a few thousand dollars internationally can cost well over $ 100. With the explosion of the concert economy, many middle class users exist.

But remittances for financial inclusion remain a central theme.

From the start, Facebook’s Libra / Diem stablecoin project touted itself as a way to make remittances more affordable.

David Marcus, who led the project (and announced his departure from the social media giant this week) made the point in October when describing a pilot of his Novi digital wallet.

“Remittances are a critical way to achieve financial inclusion,” he tweeted. “Today we are deploying a small pilot of the @Novi digital wallet app in two countries: the United States and Guatemala. People can send and receive money instantly, securely, and at no cost.

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NEW PYMNTS DATA: 2021 HOLIDAY SHOPPING PERSPECTIVES

By the way: It’s almost time for the holiday shopping season, and nearly 90% of U.S. consumers plan to do at least some of their purchases online – 13% more than in 2020. On the 2021 Holiday Shopping Outlook, PYMNTS surveyed over 3,600 consumers. to find out what drives online sales this holiday season and the impact of product availability and personalized rewards on merchant preferences.

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