Companies must develop innovative solutions for their business models to contribute to the world and deliver value. To create a noticeable difference, these organizations need a plan that can impact critical areas of concern. Join Us if you want to start bitcoin trading in only three steps, you will get the best liquidity, and the platform is immune to volatility risk. One such area is the rising remittance fees to transfer money from person to person worldwide.
Bitcoin solves many problems associated with traditional remittances for senders and recipients by significantly cheaper than conventional ways of transferring funds overseas. As a result, Bitcoin has had an enormous impact on society and the global economy over the years; however, despite the success of this technology, it still has its fair share of limitations due to lacking regulation and extensive security measures before use. These limitations make it challenging to implement in the banking industry and take a lot of time to be implemented globally.
Whether it is processing fees, payment delays, or even identity theft, these factors still exist in the remittance world. The below-mentioned portion will identify the main issues with traditional remittance services and provide solutions for how Bitcoin can help build a better financial future for those involved in supply chain management.
A Detailed Overview of Remittance:
Remittances have been around for decades, reaching over $250 billion annually worldwide. While theoretically appealing to send money from one person to another at a cheaper rate than traditional money transfer methods, there are still some crucial problems with current systems that prevent global use.
To send money overseas, users must address a few related issues to make remittances more efficient. First of all, high costs are incurred by the sender. The cost of remitting money is also proportional to the number of people involved in the transaction. It begins with the sender, which often costs the most by receiving abroad if the recipient needs assistance for their currency conversion.
Most of these fees are borne by those who need to receive their money at a less expensive rate than they should spend sending it abroad. To minimize these fees, banks often recommend that the sender use a remittance transfer. While this method makes sense for the sender in terms of being cheaper and more accessible, it also becomes very costly for the receiving end in case of needing multiple currency conversion costs.
The exchange rate also makes a difference to this equation as certain currencies become more expensive than others. The changing nature of traditional economies and trade can influence what countries spend on imports or exports. It can lead to higher costs for the recipient, which are unavoidable based on remittance rate fluctuations. In turn, these companies must increase their business or personal expenses rates to pay back those who sent them money.
How can bitcoin resolve challenges subjected to remittance fees?
Bitcoin can significantly reduce the amount it costs to send money to solve several problems associated with traditional remittance. For example, Bitcoin has been said to have a lower cost than Ripple, which has now been calculated based on the funds a sender is transferring.
Because of its lower transaction fees and faster transactions, Bitcoin can become more competitive in the remittance industry and help reduce costs for both parties involved in a transaction. Money transfer services are already growing at an exponential rate, therefore making these fees even more critical for financial organizations. There are several ways that Bitcoin can make a difference in reducing costs and saving money.
Bitcoin can help solve the issue of time delays by allowing payments to be settled quickly between users. It is estimated that the average time for a bank to settle an international transaction is about two or three days. This problem becomes more noticeable when making payments from countries with no direct links to banks in other nations.
Traditional remittance systems also charge over $10 per payment, increasing remittance costs even further. With Bitcoin, payments settle immediately without needing third-party regulation, allowing users to bypass these high fees and delays.
El Salvador Adopted bitcoin as a national currency to reduce remittance fees:
In an attempt to reduce the high fees charged by banks, El Salvador worked to make bitcoin their official national currency. But, according to their government, the skyrocketing remittance fee costs had become a significant obstacle to the country’s growing economy.
To circumvent the problem of high costs, El Salvador worked towards launching bitcoin as their national currency that could be used by people at all outlets, including ATMs and online exchanges. The move would allow local business owners who required international funds to be in an economically stable environment and avoid having difficult choices when it came down to paying high fees or stalling growth.