XRP, Libra and Visa to Fight It Out for Cross-Border Remittance Crown

The increased penetration of cryptocurrency in the digital payment arena appears to be affecting the landscape of cross-border remittances. Financial institutions and other mainstream establishments are now jostling with blockchain startups for control over an industry that could possibly experience massive growth over the next few years.

With more participants comes greater competition and an emphasis on creating the most robust operating technology. To achieve this aim, some players are leveraging their status as giants of their respective mainstream fields while others are pursuing partnerships and collaborations.

For historically unbanked and underbanked areas of the world, the emerging landscape is one that offers greater financial inclusion and the many benefits that come with it. As these companies go head-to-head, people in places historically abandoned by the complex financial machine might now be able to enter a world of global transactional independence that long seemed unattainable.

On the other side of these lofty ideals lie governments and financial regulators, which might view cryptocurrency adoption in the global payment matrix as an assault on the primacy of the state of monetary control.

Cross-border remittance is the lowest hanging fruit

According to the World Bank, remittances to low- and middle-income nations reached $529 billion in 2018 — the highest level ever recorded, exceeding the figures from 2017 by almost 10%. The bulk of these remittance payments, according to the organization’s data, occurred in Southeast Asia and Sub-Saharan Africa. The World Bank expects that remittances via these corridors will soon top $550 billion. For establishments looking to leverage cryptocurrency and blockchain technology, this potentially $550 billion market likely constitutes the lowest hanging fruit.

The payment flow for these two corridors appears to be similar in many respects. Migrants from these countries working in the United States, Europe and oil-rich Gulf Cooperation Council (GCC) countries send money to their parents and other dependents back home. Every year, young college graduates successfully immigrate from countries in Africa to Europe and North America in search of the proverbial “greener pastures.” There is a significant population of Indian expats living and working in Gulf states such as Qatar and the United Arab Emirates.

Periodically, these expats need to send money to their loved ones back home. In 2018, remittances to countries such as Nigeria, Senegal, Ghana and Togo, just to mention a few, grew to more than $46 billion — an increase of about 10% from the figures recorded in 2017.

To do so, many have to rely on money transfer services like Western Union or MoneyGram. These services charge rather expensive fees to facilitate such transactions. Figures published by the World Bank showed that it cost an average of $14 to send $200. As part of its report, Dilip Ratha, the head of the Gene