Will international banks soon rely on Bitcoin to move money between countries? American Banker posted an interesting article on March 3 on a panel of bankers who considered that very question. The panel, incidentally, was organized by SWIFT (The Society for Worldwide International Financial Telecommunication), the global cooperative organization owned by banks that operates a secure financial messaging system that enables the flow of funds across much of the world.
In 2013, developing countries received remittances worth $414 billion (USD). According to World Bank data, the global average cost of a remittance as a percentage of the transaction was 7.9%. Cross-border remittances are expensive because they involve one or more correspondent banks playing the role of intermediary when funds are wired from one country to another. In a report I wrote a couple of months ago (A SWIFT Disruption? Bitcoin and Peer-to-Peer Models Challenge the Remittance Business) I took an in-depth look at the business of consumer remittances and the potential of new business models, such as those powered by cryptocurrencies like Bitcoin, to upend the status quo.
In my analysis, I compared the prices offered by Rebit, a Manila-based, Bitcoin-powered remittance service provider to a number of established players operating in the U.S.-Philippines corridor such as Western Union, Xoom, and Remitly. Taking into account both the direct costs (fees) and the indirect costs (exchange rate spread, Bitcoin wallet funding fees) involved in the transactions, I found that Rebit did indeed offer the cheapest way of sending money to the Philippines.
