Growing up, I’ve watched family pay high fees to MoneyGram or WesternUnion in order to send money home to Mexico plus it would take ridiculously long. I would imagine people with less money than us having to pay the same fees or more to also send money home. In a global 2016, we need to be operating in a border-fluid way or else we’re failing.
The Dialogue recorded that Family remittances to Latin America and the Caribbean surpassed $65 billion in 2015, registering 6% growth over the previous year. Mexico grew 4.8%. Such a high dollar amount in remittances forced me to dig up the fraction of fees that goes into sending money home. According to Pew Hispanic, the total cost of the average remittance transfer often goes to 10 or 15 percent of the amount sent. In a global economy, this percentage can and should be significantly lower. The same resource emphasizes that “Reducing the cost to 5 percent of the amount remitted would free up more than a $1 billion next year for some of the poorest households.” Increasing the number of remittance businesses would increase competition and lower fees that the money transfer business so desperately needs.
A payment structure like Abra that’s facilitated through a blockchain provider and allows transfers from fiat to digital cash is revolutionary for people all over the world, especially in a Bitcoin ripe environment like Mexico. People and businesses not only benefit from the higher efficiency of the blockchain technology, they also benefit from a lower fee structure compared to current ones.
I used to be more concerned and not completely understanding of the operating models that new remittance services would use. Am I using cash, Bitcoin, some, or none? How is the person receiving it? How is the person cashing out? etc. After more research and trying it out myself, I’ve learned it’s more flexible than I initially expected. I was surprised that my expectation for having a difficult time made me overcomplicate the idea. I’m really excited about the power to use full Bitcoin and cash in any combination since it heavily reduces the need to even need a bank in order to send and receive money independent of where you are.
Up until recently, financial inclusion has been controlled by large banking institutions and governments instead of by the people that earn and spend their money. Banking this way has led to poorly servicing large populations of the world, leaving many unbanked or underbanked. Thanks to blockchain chain technology, I see banking moving away from traditional and towards mobile with an emphasis on digital currency applications for the Hispanic population.