Remittances are a lifeline for many individuals, households, and businesses, relying on regular payments from overseas. In 2019, the World Bank reported remittances to low and middle-income economies amounted to an estimated $550 billion. The latest reports suggest the global remittances market would hit $2 trillion in the next few years. That indicates the importance of remittances to the global economy, improving living standards, and bringing capital to those that need them the most. 

How Remittances Work 

Remittance refers to money sent or transferred to another party overseas. The traditional systems mainly occur through wire transfers, electronic payments, drafts, or cheques. A customer who needs to send money pays a local currency to a Money Transfer Operator (MTO) then informs the recipient to collect the funds in their preferred currency at the destination country. 

The MTOs usually have intermediaries or middlemen completing the payments in the destination countries. Most of them operate through networks comprising larger remittance software providers. As a result, MTOs often charge very high fees since their intermediaries and service providers must also get a cut from every payment. Besides, MTOs also have additional regular charges for subscription, installation, and system maintenance. 

Bitcoin Remittances and Their Unique Benefits 

Bitcoin is a digital currency facilitating remittances like fiat money. However, it has some unique properties, making it a better alternative for international payments than conventional systems. The following are the key reasons why Bitcoin is good for remittances. 

Unlimited Cross-border Transactions 

The traditional remittance systems such as banks and RSPs are subject to various regulatory requirements. That significantly restricts the number of international payments they process. Sometimes, they decline to process payments to some countries, maybe due to sanctions or political influences. Bitcoin's decentralization makes it not subject to government or institutional regulations. That enables users to send and receive money worldwide without any external intervention. Bitcoin users do not need the help of banks or remittance service providers to send or receive payments internationally. Anyone can access the Bitcoin network to send or receive payments at their convenience with a smartphone and internet connection. 

Lower Fees 

As aforementioned, the conventional remittance systems involve multiple parties in transactions, using several intermediaries to complete cross-border payments. Besides, they also operate on extensive networks with unique compliance procedures. That makes the cost of sending money through banks or RSPs very expensive, especially for smaller remittances. A recent World Bank report indicates that a $200 remittance costs an average of about 5% to 9.3%, based on the service and destination country. 

Contrary to the traditional systems, most Bitcoin payments cost just about 1%. Immediate Edge is a reputable crypto exchange with lower transaction fees. Bitcoin payments bear meager expenses because they do not involve intermediaries, occurring virtually on a blockchain. Besides, Bitcoin transactions are not subject to regular subscription, installation, and system maintenance charges. Bitcoin remittances are relatively cheaper than bank transfers, credit, and debit card payments. 

Faster Payment Processing 

The traditional remittance systems' vast networks might seem efficient, but they operate under strict and unique regulatory frameworks. That is why they often take several hours, days, or weeks to complete international payments. However, Bitcoin is a peer-to-peer currency, exclusively using blockchain technology to verify and validate transactions. The absence of intermediaries or third parties in Bitcoin payments reduces redundancies, ensuring faster payment processing. Bitcoin remittances take an average of 10 to 40 minutes to complete. 

Millions of people worldwide rely on remittances for basic needs and capital. However, the traditional payment systems are expensive, with several restrictions. Bitcoin offers the best solution, facilitating unlimited, low-cost, faster, and secure international remittances.