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Is Blockchain Changing the International Remittance Industry?

Is Blockchain Changing the International Remittance Industry?

Is Blockchain Changing the International Remittance Industry
March 22, 2019 | Guest Blogger: Jon Dela Cruz

There is good reason behind the international overseas money transfer industry being rife with competition. After all, a significant amount of money is sent by people across borders each year. For instance, migrants living in different parts of the world sent over U.S. $570 billion to their home countries in 2016. While some FinTech players have managed to affect a change in this field, has blockchain technology made any significant inroads yet? And will it have a significant impact on the way that we manage the security of encryption?





What is Blockchain?


Blockchain technology is an incorruptible digital ledger or database of transactions. Information held on a blockchain is shared throughout the network and is continually reconciled. This public database holds all the information relevant to any transaction. The use of blockchain technology has extended beyond the financial world, and is now found in governance, healthcare, education, and supply chain.

Blockchain and Overseas Money Transfers

All blockchain money transfers work in the same basic way. When a transfer is initiated, its details are configured into a block. This block is distributed throughout the blockchain network. What follows is the validation of the transaction through the network. The block is added to the blockchain once the transaction receives approval by a majority on the network. The recipient then receives the funds, while details of the transaction are permanently stored in a public database.

A Ripple or a Wave?

Ripple, a blockchain-based currency exchange and remittance network created by U.S.-based Ripple Labs Inc., has already found several takers. What makes Ripple unique is that the company provides a distinct blockchain-based payments system for banks and financial institutions.

The first big name from the international remittance market to partner with Ripple was MoneyGram. This tie-up was announced in January 2018. Western Union, another market leader, was quick to follow. In mid-2018, InstaReM and BeeTech announced that they would start working together using Ripple’s blockchain technology.

In all, over 100 financial institutions from different countries have already entered into partnerships with Ripple. Some of the prominent names from this list include:

  • American Express
  • UBS
  • Crédit Agricol
  • Itau Unibanco Holding SA
  • Royal Bank of Canada
  • The Japan Bank Consortium
  • IndusInd Bank
  • National Bank of Abu Dhabi
Benefits of Blockchain

While overseas money transfer companies and banks stand to benefit by adopting blockchain technology, so do end-users, people who send and receive money to and from foreign countries.

  • Increased cost effectiveness. According to data, the average cost of sending money overseas through online companies such as TransferWise, WorldFirst, or OFX is around 5.7% lower when compared to the average cost incurred through banks. This is despite the fact that money transfer companies still rely on banks to function as intermediaries. Since blockchain transfers do not require intermediaries, the technology holds the potential to eliminate banks from the process completely, so people may look forward to even lower transfer costs.
  • Speedier transfers. If you transfer funds overseas through a bank, the recipient might have to wait for days to receive the money. With international money transfer companies, turnaround time typically depends on the currencies involved, the mode of payment, and the desired transfer method. Blockchain-based transfers, depending on the cryptocurrency used, may go through almost immediately.
  • Access to the Under Banked. Several people living in different parts of Asia, Africa, and South America do not have access to traditional forms of banking yet. When sending or receiving money to or from across borders, they typically have to turn to a handful of companies that have cash pickup centers in their neighborhoods. These transfers tend to come with significant fees. Since most people in these areas have access to mobile phones, they can use cryptocurrency-based digital wallets to good effect.
  • Increased security. It is not easy for hackers to penetrate systems that run using blockchain technology. Cryptography plays an important role in protecting links that connect blocks and the information they hold, making it impossible to forge or destroy previous transactions. Besides, attempts to modify or falsify entries on a blockchain are easily detectable.
Possible Downsides

People who have not dealt with cryptocurrencies in the past might need to spend some time in understanding how they work. For instance, the value of a cryptocurrency may fluctuate noticeably from the time you initiate a transfer to the time the recipient receives the money. In addition, crypto exchanges are known to follow different pricing structures.

Regulatory guidelines for crypto-based transfers are not in place yet, so it is best that you work with reputed companies. Consider shortlisting ones that have favorable user reviews. Other factors that need your attention include the cryptocurrencies on offer, processing time, and payment methods.

Another possible downside is that you stand the risk of getting exposed to currency conversion twice. For example, to send money from the U.S. to Japan, you will first need to buy a cryptocurrency using U.S. dollars (USD). The recipient will then need to sell the cryptocurrency to receive Japanese yen (JPY). With a conventional transfer, the USD would convert to JPY directly.

The Road Ahead

New blockchain-based solutions may find success if they work in reducing costs. They will need to offer technology that can be integrated easily, and they will have to work on lowering compliance risks. It is not unrealistic to assume that blockchain may also help banks become more competitive in this realm. However, the crux lays in ensuring that emerging solutions take security to the next level. After all, an important aspect of blockchain is the use of the latest in encryption standards coupled with multifactor authentication at different stages of a transaction.

This requires organizations to manage their encryption assets and the Venafi Platform helps organizations reduce risk by ensuring proper key and certificate configuration. Monitoring and reporting capabilities also provide visibility into the ongoing state of your security and compliance, protecting you from cybercrimes.


Given the interest that Ripple has managed to create in the world of overseas money transfers, it is safe to say that blockchain technology in this realm is here to stay. How quickly the technology gathers a stronghold, though, remains to be seen.


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About the author

Guest Blogger: Jon Dela Cruz
Guest Blogger: Jon Dela Cruz
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