George is an African migrant worker in the US. His friend Shyla is an aid worker based in the UAE.
At the end of every month, George sends money to his family in Africa, while Shyla’s agency sends aid to different humanitarian organizations in Southeast Asia, the Middle East and Eastern Europe.
George and Shyla have tried different platforms in search of an affordable, fast and secure way to send money.
In 2022, George explored different platforms. For this article, we will call them Platforms A to D. George learnt that for every $200 he sends through Platform A, there is a service fee of $4.68. In Platform B, its $8.72, Platform C, $12.44 and Platform D its $10.12. For all these platforms, it may take no less than 24 hours for the money to be transferred, unless the sender is willing to pay higher fees. During the 24-hour waiting period, George worries that things can go wrong because there is no way of tracking the transaction in real-time. There is also no way of verifying that the money is being transferred. He only relaxes when he receives a notification from home that the money has been received.
Like George, Shyla’s agency is concerned about the cost of sending much needed help to distressed communities. The agency relies on the goodwill of donors, such a George’s employer, to raise funds. Therefore, every dollar spent on services fees, is a dollar that could have fed a child in Nepal or rebuilt a home in Syria and elsewhere.
High service fees, lack of transparency, and turnaround time are some of the major problems with remittance service providers.
According to the World Bank,
the average cost for sending remittances from the G8 countries increased from 5.68% in Q2 2022 to 5.98% in Q3 2022.
The cost of remitting from G20 countries increased from 6.14% in Q2 2022 to 6.39% in Q3 2022.
South Africa remains the costliest G20 country to send remittances from (see Figure 7). This is despite an overall decrease from its peak in Q1 2013, when the cost of sending from South Africa was more than 20%. In Q3 2022, remitting from South Africa incurred an average cost of 15.01%, a moderate increase from its recorded value of 14.73% in Q2 2022.
The cost of sending from the second most expensive G20 sending country – Brazil – was recorded at 9.01% in Q3 2022. The Republic of Korea is the least expensive G20 sending country, recorded at 2.07%, followed by Saudi Arabia (4.22%), Italy (4.79%), the United States (5.36%), Australia (5.82%), France (6.09%), and the United Kingdom (6.33%).
By any measure of imagination – these costs, are ridiculously high.
Blockchain solutions
Blockchain payments, also known as blockchain payment systems, include the use of blockchain technology to conduct payments. Blockchain payments are quick, safe, and low-cost, making it easier to transfer money no matter how far apart the sender and the recipient are.
Because blockchain payments aren’t only restricted to cryptocurrency transactions, the technology can support payments from multiple currencies like U.S. dollars, Canadian dollars and more.
The effectiveness of blockchain has led to it becoming the preferred method of sending money. The main goal of using blockchain technology for finance is to do away with centralized organizations like banks, making it as simple as clicking "send" to make a payment. No third-party processing fees or waiting periods for money transfers. Instantaneous transfers of blockchain-based cryptocurrencies around the globe can be documented for auditing purposes and increase market liquidity. This makes blockchain transactions transparent.
There are various crypto payment solutions that help to reduce obstacles like day-long waiting times and exorbitant costs for international transactions. Blockchain, according to American Express, will facilitate real-time domestic and cross-border payments at cheaper prices compared to traditional systems and can even alleviate these issues.
Telcoin remittance services
Telcoin is a FinTech company that creates low-cost, high-quality financial products for every mobile phone user in the world.
Telcoin works with telecom and mobile money providers globally, enabling direct connections to trusted platforms that are already used by millions.
The Telcoin App now supports fiat remittance from Canada and the United States to 16 countries. Use your bank account to send to the following countries/mobile money platforms (additional corridors coming soon).
With the global average cost of sending a US$200 remittance still high at 6.5% in the fourth quarter of 2020, Telcoin is targeting just 2.5% or less for its contactless and compliance-focused service.
Before sending money from Telcoin to a recipient, you must register either through the Telcoin App and partner website or app. You must provide all needed information together with the beneficiary's complete name as registered in the Telcoin App and partner website or app and their mobile number.
The steps are generally as follows (Please note that these steps may vary slightly as the platform is updated):
Log in to the Telcoin App and verify your identity with a government-issued photo ID.
Enter the beneficiary country, phone number, amount, and send. Tap the home screen to send money.
Enter the beneficiary’s information.
Enter or select the amount you want to send and tap Send Money. Fill in the required additional details and tap Next.
Review the transfer details before the sixty second exchange rate quote expires. Enter your Telcoin App pin then tap Confirm & Send.
Telcoin leverages blockchain technology to provide access to low-cost, high-quality decentralized financial products for every mobile phone user in the world. George and Shyla can send money through fast and affordable decentralized Telcoin App.
This is just another reason why the Telcoin App is fast becoming remittance platform of choice around the world.
In 2022, East Asia and Pacific remittances rose 0.7% to $134 billion, reversing a two-year drop. Labor shortages in the hospitality and health sectors of high-income economies and increasing oil costs for Gulf Cooperation Council countries boosted remittances. Due to COVID-19 travel limitations, remittances to China declined roughly 4%. Remittances account for 50% of GDP in Tonga and Samoa (34% ). Due to worsening conditions in migrants' destination countries, remittances are expected to drop 1% in 2023. In the second quarter of 2022, sending $200 to the region cost 6.2%, up from 5.8% a year earlier.
European and Central Asian remittances rose 10.3% to $72 billion in 2022. Rising oil prices and need for migrant workers increased Russian remittances to Central Asian countries. Russia's dollar-denominated remittances to Central Asia rose due to the ruble's rise. Remittances to Kyrgyzstan and Tajikistan reach 30% of GDP. Due to lower outlooks for key remittance-sending countries, remittance receipts are expected to grow 4.2% in 2023. In the second quarter of 2022, sending $200 to the region increased by 6.4% (data excludes corridors originating in Russia).
Latin American and Caribbean remittances rose 9.3% to $142 billion in 2022. Nicaragua increased 45%, Guatemala 20%, Mexico 15%, and Colombia 9% in the first nine months of 2022. Remittances increased as Latin Americans worked more in the US. Transit migrant remittances boosted flows in Mexico and Central America. Remittances exceed 20% of GDP in El Salvador, Honduras, Jamaica, and Haiti. Due to weaker US, Italian, and Spanish economies, remittances will likely grow 4.7% in 2023. In the second quarter of 2021, sending $200 to the region cost 6%, up from 5.6%.
In 2022, Middle East and North African remittances grew 2.5% to $63 billion, compared to 10.5% last year. Remittance growth slowed as real wage gains in the Euro Area eroded, even as home nations demanded more due to drought in the Maghreb and high imported wheat prices. Remittances make about 38% of GDP in Lebanon and West Bank and Gaza (19% ). In 2023, remittances will rise 2%. In Q2 2022, sending $200 to the region cost 6.3%.
Remittances to South Asia grew an estimated 3.5% to $163 billion in 2022, but there is a large disparity across countries, from India's projected 12% gain—on track to reach $100 billion in receipts for the year—to Nepal's 4% increase to the region's remaining countries' 10% decline. The easing of flows reflects the end of special incentives certain governments had devised to encourage flows during the pandemic and preferences for informal routes with better exchange rates. Wage increases and a solid job market in the US and other OECD nations boosted Indian remittances. Direct assistance policies kept inflation low in Gulf Cooperation Council destination nations, allowing migrants to remit. In the second quarter of 2022, sending $200 to the region cost 4.1%, down from 4.3%.
In 2022, Sub-Saharan Africa, the region most affected by the global crisis, received $53 billion in remittances, up 5.2% from 16.4% in 2021. (due mainly to strong flows to Nigeria and Kenya). As global and regional conditions worsen, remittances are expected to climb 3.9% in 2023. In Gambia, Lesotho, and Comoros, remittances account for 28–21% of GDP (20% ). In Q2 2022, sending $200 to the region cost 7.8%, down from 8.7% a year earlier. The least expensive routes average 3.4% remittance, while the most expensive corridors average 25.2%.
Bottom line
It is clear that the world is in need of better remittance services. Users such as George and Shyla will find Telcoin remittances great for several reasons:
Fast and Efficient: Telcoin remittances are fast and efficient, as they are based on blockchain technology. This means that transfers can be completed in a matter of seconds or minutes, rather than days or weeks, as is the case with traditional remittance methods.
Low Transaction Fees: Telcoin remittances typically have lower transaction fees compared to traditional remittance methods. This is because Telcoin uses a decentralized blockchain network, which reduces the need for intermediaries and associated fees.
Secure and Transparent: Telcoin uses a decentralized blockchain network to ensure that transactions are secure and transparent. All transactions are recorded on the blockchain, making it difficult for anyone to alter or manipulate the data.
Accessibility: Telcoin remittances can be accessed from anywhere in the world, as long as there is an internet connection. This makes it easier for people to send and receive money across borders, particularly for those who may not have access to traditional banking services.
DID YOU KNOW: The Telcoin App is your mobile access point to the entire suite of user-owned Telcoin products, including a fast and affordable fiat remittance portal and a digital wallet on the Polygon Network. Simply download the Telcoin App on your smartphone and begin Sending Money Smarter.