5 Insights Into the Blockchain Remittance Market
Sending money across borders to friends and family has always been a costly affair. The time and money eaten up by these transactions has traditionally been very high, but with advancements in technology like blockchain, this may no longer be the case in the future.
A better process for remittance is charging the world economy in what is posed to become a $1 trillion market by 2022. Hundreds of million of people who will see meaningful impact in their lives as they get to keep more of their money and don’t have to wait nearly as long to get it.
The industry is growing, but not as expected.
While large monetary transaction have traditionally relied on trade to be worth the hassle, lower barriers are expected to shift the market towards new avenues. Commerce will be one of the biggest winners.
For retail a huge shift in the social classes is happening across the globe. China in particular has seen unprecedented growth in its urban upper middle class. The power of these groups is driving up the average values of transactions and helping fuel the growth of digital solutions.
Ecommerce will continue to rise on the global state. Low cost transport, the ease of small item purchases, and increases in comfort will help drive secure transactions. Marketplaces and platforms involved in the gig economy are expected to see some of the biggest increases.
Smaller businesses will be able to bridge geographical gaps and have the chance to reach new markets with more affordable payments. While large corporations will continue their trend towards specialization and internationalization.
Customers will shape the future.
While large banks and providers used to hold the power in the remittance market, this is likely to shift to individual consumers as they have more access. The expectations of customers are also changing, with consumers demand in a more seamless and transparent process.
They are expected to desire the same real-time payment options that they enjoy domestically as well as access to the same payment methods and tracking that they see now. As markets move up and down, these services will also be able to track exchange rates in real time and hold important transactions until the exchange is favorable.
An integrated experience is coming.
While the end user likely won’t see much of a difference in service, the value chain will continue to fragment. Customers will have access to a variety of payment options and payment paths to choose from, each with their respective strengths and weaknesses. Online options like Paypal and Alipay will mix with card payments, correspondent transfers, and distributed ledgers.
Blockchain will take over on the back end, with banks partnering with remittance specialist enterprises to emphasize smaller international payments. Users will see less and less of what goes on and instead conduct all their transactions on the front end of larger platforms.
Finding solutions to fragmented standards
While there are organizations like CLS and SWIFT that are working to bring unity to global transaction banking, they will likely not be able to keep up with the evolution of the market. International trade rules will keep growing and diverging. Technology platforms will rise and fall, and the methods available to pay will continue to multiply.
Since the inception of bitcoin over a decade ago, there are dozens of companies that have taken up blockchain remittance. What was a risky sector is now becoming the target of established players in the fintech game.
There may be a pivot from trying to have standardization in the industry to making it easy to operate between solution in fragmented markets. Within different channels, consolidation will continue due to scale being a factor. APIs are expected to play a critical role in connecting multiple payment rails and handling compliance with different sets of standards.
The closest the industry may come will be using the same token between businesses. Many blockchain focused companies like Biquiti don’t intend to create their own tokens, but build on existing infrastructure like in the case of using RippleNet and Stellar.
Cross border barriers are lowering.
The pricing for international payments is under intense pressure to keep going lower. These transactions always demanded premium prices due to complexity, regulations, and value-add services. Now, the race it to make moving money across the globe cheap enough that micropayments become profitable.
Companies are honing in on making a $1 transaction a profitable reality in the near future. Blockchain based companies are working to reduce prices to be competitive with domestic payments.
These payments are already hundreds of times faster than traditional channels. Compared to traditional channels, those that use blockchain move money 388 times faster according to a sample of payments taken from the World Bank.