Cryptocurrency is reshaping how the world manages online sending money, offering innovative solutions for faster, more affordable transactions.

How crypto is changing online money transfers

If you’ve been following advancements in financial technology, you’ve likely heard about cryptocurrencies’ potential to improve online money transfer and address challenges in cross-border remittance payments. But how does this work in practice? Let’s dive into how crypto simplifies remit money transfer and where it might play a transformative role.

What are remittances?

From the Latin remittere ("send back”), a remittance refers to non-commercial payments made by individuals living abroad to family members in their home countries. While remittances might not be a priority in developed economies like the US or UK, they form a critical part of GDP in developing nations such as India, Lebanon, and Nigeria. For example, in Somalia, remittances contribute to over one-third of the country’s income.The International Fund for Agricultural Development (IFAD) reports that more than 70 countries rely on remittances for over 4% of their GDP, with rural households being the primary beneficiaries. These payments provide a lifeline to millions of food-insecure families.

How traditional money transfers work

In traditional remittance systems, payments are typically processed by a Money Transfer Operator (MTO). For example, someone might send $200 through an MTO, which instructs its agent in the recipient’s country to deliver the funds in local currency. However, these transfers come with significant fees. Between transfer charges, currency conversion costs, and exchange rate margins, recipients often lose around 7% of the original payment.

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Crypto and online sending money

Cryptocurrencies offer a more streamlined way to handle money transfer without the need for intermediaries. These peer-to-peer systems eliminate banks and MTOs, ensuring faster and cheaper transactions.This decentralized approach makes crypto particularly valuable in reducing costs and offering users greater control over their transactions. When traditional systems fail due to inefficiencies or high fees, crypto provides a resilient and efficient alternative.

Banking the unbanked

Crypto is also a promising tool for financial inclusion. Over 1.7 billion people globally lack access to traditional banking. While crypto isn’t the sole solution, it’s a powerful enabler for these individuals to participate in global financial systems, allowing them to send and receive payments seamlessly. José Rafael Peña Gholam, a Venezuelan cryptocurrency expert, explains: “I’ve sent crypto from Venezuela to family members in Colombia and Spain. These transactions are often faster and cheaper than traditional methods, with fewer steps involved.” In Venezuela, where remittances in crypto are on the rise, digital currencies are proving to be an efficient way to get paid in ETH and other cryptocurrencies.

Why crypto could replace remittances

Cryptocurrencies blur the lines between domestic and international payments, offering the same speed and cost regardless of the recipient's location. As this technology evolves, it might replace the need for traditional remittance systems altogether. For businesses or individuals seeking alternatives to traditional methods, money transfer services built on cryptocurrency platforms are a compelling option.

Ready to simplify your money transfers?

Using cryptocurrency for remittances can streamline the process, reduce costs, and eliminate barriers to financial access. Whether you're sending money internationally or exploring alternative financial tools, crypto has the potential to transform how we think about cross-border payments.

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