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The non-for-profit Stellar network has launched a Blockchain-backed money transfer to compete with SWIFT.
Stellar is launching one of the first Blockchain applications which may hold the potential to affect a large number of people outside the digital currency space, through its global money transfer network aimed at some of the world's largest remittance markets.
It has been described by CTO Jed McCaleb as an open-source SWIFT-like network that allows connected organizations to transact with one another thus helping to reduce the friction that contributes to higher fees. The platform also connects diverse financial systems with one technical integration.
He says to Cointelegraph:
“Given the diverse nature of global financial services today, this interoperability can substantially lower global remittance costs by making transactions that cross national boundaries, currencies and financial institutions much more efficient. Transactions processed on the Stellar network take only 3-5 seconds to complete, and are extremely low-cost, regardless of the size of the payment amount, attributes that make the platform uniquely suitable for international remittances.”
Stellar has partnered four key institutions to enable low-cost global money transfers to India, the Philippines and Europe as well as cross-border M-PESA payments to and from Kenya, Ghana and Nigeria. These new partnerships are particularly meaningful to the company because it is one of the first applications to use Blockchain technology to positively impact a large number of people who aren't already entrenched in the digital currency space.
Coins.ph enables individuals to send global remittances to anyone in the Philippines using a Stellar wallet or from any institution connected to its network. In addition, ICICI Bank, India's largest private sector bank, will cater for the Indian market and Tempo Money Transfer will serve 35 countries.
Flutterwave will use the network to support cross-border payments for M-Pesa, a mobile platform for money transfer and financial services used by about 21 mln subscribers in Kenya. The new service will expand users’ ability to send payments regardless of whether they are based in Kenya, Ghana or Nigeria.
According to the World Bank, global remittances to developing countries amounted to $431.6 bln in 2015, and Stellar, with its new remittance service, is targeting new markets. This includes three of the top five remittance receiving countries - India, the Philippines and Nigeria - with a combined market value of more than $118 bln.
Stellar is a non-for-profit network and operates on the belief that the world’s financial infrastructure is so important that it should function more like a public utility, such as the Internet. In addition, they also believe that it shouldn’t be owned by one for-profit entity and should bring financial services to all, including the underbanked.
McCaleb adds that the Blockchain-based solution will seek to eliminate the need for all intermediaries, allowing consumers and businesses to interact with each other directly as they do via email.
“One of the most important applications that is generally highlighted about Blockchain technology is its potential to bring financial services to the underbanked.”
However, he underlines that up until this point, the benefits of Blockchain have largely served technologists and the Bitcoin community. With this project, Stellar.org aims to take a collective step forward in fulfilling the promise of using Blockchain technology towards financial inclusion for the 2.5 bln people worldwide who are underbanked.
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