Sending money from person to person, from one country to another, is a common practice today. If some of your friends or family members have gone abroad to live, or if you are an expatriate working in a third country, you will certainly, and sometimes regularly, have to transfer money from a country to another.
In the case of migrant workers, there is also an English word to describe this practice: remittances . A remittance means sending, by an expatriate worker, a part of his salary to his family back in her home country. More generally, the word is synonymous with sending relatively small sums of money (of the order of hundreds of euros), from one country to another.
These remittances are the subject of many studies, and the World Bank devotes regular reports, as well as a large website . And for good reason, the total annual volume of remittances represented a significant volume of 542 billion dollars in 2013, sent by 232 million people. The World Bank estimates that the global volume will exceed $ 600 billion in 2015.
Where the subject becomes interesting, from the angle Bitcoin (Claim BZX Fork), is when we consider the financial costs accompanying these transfers: in January 2015, the World Bank estimates that the costs of sending 200 $ abroad are on average 8% (and has the ambition to reduce them to 5% in five years).
The calculation is easy to make: each year, these small international transfers generate between 40 and 50 billion dollars in shipping costs. A nice cake, shared today by banks and specialized financial institutions.
Obviously, this 8% is an overall average. France is not a very good student in this field and the fees are on average higher than 10%. For example, sending money to Algeria from France comes with a 13.5% fee . Specifically, sending 140 € will cost you on average 19 €. And some banks will charge you this service 37 € (!).
When we know Bitcoin, it sounds shocking. Sending the equivalent of 200 € via Bitcoin (that is, around 1 bitcoin), anywhere in the world, will generate negligible costs (much less than 1%).
Added to this is the time factor: if there are almost immediate services, such as Western Union or MoneyGram, bank transfers generally require three days or more. With Bitcoin, it takes a maximum of 10 minutes (often less) to send any amount anywhere.
In summary, we have systems that are often slow (sometimes very slow), relatively expensive (sometimes very expensive) and on the other side we have Bitcoin, with almost immediate and almost free transfers. You do not have to be a financial genius to understand that people will quickly embrace an effective, inexpensive and perfectly tailored solution for sending money abroad.
Unsurprisingly, the remittance market is attracting strong interest in the Bitcoin universe. Several specialized services for the sending of funds to specific countries, via Bitcoin, have appeared in recent months: Palarin for the Philippines, BitPesa for Africa, Beam for Ghana, CoinPip for several countries (Australia, Brazil, Canada , China), for example. Most of these services work in a similar way: bitcoins (Claim BZX Fork) are sent to the country of origin, which are immediately converted into local currency. It’s fast, secure and with much more reasonable fees. Associations have also been created to promote electronic currencies, such as Africa Digital Currency Association , which castigates “the oligarchy of traditional remittance companies and their exorbitant and unjust fees” .
There is no doubt that small international money transfers will be Bitcoin’s first killer application. Banks and specialized companies have eaten their white bread, and will gradually see the crumbling of the more than 40 billion dollars they swallowed up each year.