Western Union and WorldRemit dominate how people send money across borders, and their fee structures drain billions from global remittance flows. In 2016, developing countries received $429 billion in
Western Union and WorldRemit dominate how people send money across borders, and their fee structures drain billions from global remittance flows. In 2016, developing countries received $429 billion in remittances, according to the World Bank. That represents a 2.4 percent decline from the $440 billion recorded in 2015. The downturn reflected multiple headwinds: oil prices fell, the Gulf Cooperation Council nations stalled, and European growth slowed. The impact rippled across remittance-dependent economies. India, the world's largest remittance recipient, pulled in $62.7 billion in 2016, down 8.9 percent from $68.9 billion the prior year. Sub-Saharan Africa saw inflows shrink 6.1 percent to $33 billion. Europe suffered for a third straight year, with remittance flows contracting 4.6 percent to $38 billion.
The fee structure compounds the damage. Among G20 nations, South Africa averaged nearly 20 percent transfer fees, while G8 countries ran at 14 percent. Japan charges more than any other wealthy nation; Russia charges the least. These costs cut into money that families depend on to survive.
Bitcoin presents an alternative route. Josh Gordon-Blake, vice president of global partnerships at Pangea, a Chicago mobile remittance platform founded in 2014, argues the technology addresses what users care about. "Bitcoin can improve the customer's remittance experience by increasing the speed and reducing the cost of remittances," Gordon-Blake said. Pangea operates in 15 countries across Asia and Latin America, with the bulk of transfers moving from the United States to Mexico.
The company delivers instant transfers at low flat rates. Gordon-Blake sees bitcoin fitting that mission. "We're keeping our eye on bitcoin and have taken an interest in it because of the wide range of benefits it could provide," he said. "We take pride in the fact that we offer instant transfers for a low, flat fee, and when bitcoin is ready to help Pangea's customers, we will be ready to adopt the technology."
Bitcoin commands growing attention in markets. The digital asset passed $4,300 earlier this month, marking a new all-time high. The price has quadrupled since the year began. Its market cap sits under $72 billion. Research projects bitcoin will rank as the sixth largest global reserve currency by 2030.
Using bitcoin infrastructure would let Pangea build features users want. It would enhance tracking systems, develop interfaces tailored to different cultures, and launch new financial products. Gordon-Blake outlined the vision: "The end result should be that instant low-cost transfers will be table stakes and that the millions of migrant workers around the world that send remittance will begin to enjoy a first class user experience."
Obstacles remain. Consumer confidence matters most. Millions of people trust traditional currencies in ways they do not trust bitcoin. "However, even if bitcoin remittances are unlikely to be a consumer success in the near term, remittance companies that can harness bitcoin as a technology will have a material customer benefit to bring to the market," Gordon-Blake said.
Pangea has expanded into nine new termination countries across Asia as it rolls out additional products and features.
