The extensive benefits of using Bitcoin to send or receive money overseas.
The pandemic highlighted the drawbacks and loopholes of traditional cash transfer methods. While people have now resorted to digital methods to send money or engage in transactions, the current digital methods lack in efficiency, speed, and are highly expensive.
Essentially, remittances are a source of financial security and financial relief to millions of families living in developing nations. Remittances are typically funds sent back home to relatives by an immigrant. With the pandemic causing travel curfews and restrictions, the majority of people can only send/receive money digitally as they are unable to leave their homes.
Traditional Cash Transfer Services to Send Money Overseas
Over time, people have been using traditional cash transfer services such as mail, check, drafts, wire transfer like western union and electronic transfer for sending remittances and money overseas. However, these methods are slow, costly, unsuitable for billions of unbanked population in developing countries and have limited accessibility.
In a traditional cash transfer process, you first need to visit the nearest physical Money Transfer Operator (MTO) and fill in financial information based on the transfer. The MTO agents will convert the local currency into the currency that you wish to send using their exchange rates. Usually, rates of MTOs are usually higher than market rates.
Furthermore, the MTO charges a transaction fee for processing your overseas transaction. In addition to this, you may have to pay an extra fees for Remittance Service Provider (RSP).
RSPs are financial solutions providers that build cash transfer softwares and initiate cash transfers for small operators. The RSP will cut a large portion of transaction fees from the MTO’s fees in such a case. This often results in high charges for sending/receiving money. Other drawbacks include being charged a deposit, sending, and withdrawal fees.
Two Primary Problems of Traditional Cash Transfer Services
People using traditional cash transfer methods to send money abroad are faced with two challenges.
Bank to bank and wire transfers could take up to five business to execute successfully. This duration might extend even longer due to delays by the receiving banks. These bank delays might take an additional 2-3 days. If this is your first transaction, the bank could also hold for additional days to prevent fraud cases.
Traditional cash transfer services are costly. They charge high fees for withdrawing, depositing, and transferring cash. The rates are also customized for higher profits, which could lead to further expenses.
Additionally, the operators may have varying fee structures depending on the amount of money you are transferring and the speed you intend for your transfer. In this case, you may be required to pay more for speeding up the process.
Need for a Bank Account
In some instances, you may require a bank account to access transfer services. This becomes a problem in regions where its difficult to find a banking service. For example, over 80% of Africa’s adult population is unbanked.
What about Online Payment Methods?
Online payment methods like PayPal are an option to send money overseas. However, these payment solutions have several drawbacks and are also quite expensive.
Paypal subjects new account owners and some countries to unconditional account holds, which might be unreliable and painful. Online banking and transfers add an additional layer of inconvenience by requesting SWIFT codes, utility bills, account numbers which further brings inconvenience in the process. Furthermore, your account could be subject to maximum limits, hence controlling the amount of funds you can send, receive or withdraw.
How do you Use Bitcoin for Sending Money Overseas?
Transferring money through Bitcoin is slightly the same as a traditional Money Transfer Operator (MTO). However, MTOs are not third-party intermediaries charging a heavy price for processing your transaction.
Sending or receiving money overseas with Bitcoin facilitates a seamless, efficient, and cost-effective process. Bitcoin transactions are near instant, not restricted to geographical or time barriers, and can be processed from any device with an internet connection. Bitcoin or any other cryptocurrencies can be send via a payment gateway solution to any other exchange platform or a cryptocurrency wallet.
You can use XanPool services to send Bitcoins or any other prominent digital assets. XanPool offers a non-custodial solution to send Bitcoins in a near-instant manner with nominal transaction and processing fees. Moreover, unlike traditional cash transfer services or online payment solutions, the process of onboarding and processing transactions is convenient and optimized for users.
Benefits of Sending Money Overseas using Bitcoin
Cheap and Affordable - Bitcoin transfers are fast, cheap, and affordable. You won't pay extra fees for speed. The process is not dependent on intermediaries or third-party conversion services. Converting from fiat currency to Bitcoin is also cheap and easy.
Decentralization - Bitcoin is decentralized. This means the service is up 24/7 and not reliant on the basic corporate schedule that’s often bound with holidays and weekends. There are no limits or unnecessary holds. Bitcoin frees the financial world from the troubles of bureaucracy.
Versatility - Bitcoin brings versatility and simplicity to global cash transfer. The process is also effortless and flexible. You are free to send a micro or macro amount using Bitcoin.
Limitations of Sending Money Overseas using Bitcoin
The learning curve associated with new technologies - you might have to learn a few basic concepts about bitcoin, transferring, and receiving cash through crypto. The terms might be intimidating the first time, but all you need is the patience to learn and understand how to conduct a simple Bitcoin transaction.