The remittance industry seems to be ripe for disruption thanks to blockchain technology. But a recent report from Equities Research shows that not everything is rosy. There are some limitations to take into account for companies dealing with Bitcoin, but other distributed ledger-based companies may fare better.
Blockchain in Remittance Remains Iffy
Various Fintech companies are eyeing the remittance industry, as this sector is prone to disruption. More secure solutions, at a lower cost for sender and receiver, are worth exploring. Interestingly enough, nearly all of these Fintech solutions are using distributed ledger technology to achieve their goal.
Among the Bitcoin companies exploring this industry are Abra and BitPesa, who built remittance solutions on top of blockchain technology. Ripple is an active contended in this field, albeit they use their own distribute ledger to achieve transfers. In fact, their technology has been trialed by Santander bank earlier in 2016.
But there are still some drawbacks to using Bitcoin in the remittance industry. Unlike what most people may want to believe, Bitcoin is not the cheapest solution compared to offerings such as Xoom, Western Union, and Azimo. That being said, there are competitive prices to be found, even though Bitcoin remains overall more expensive than TransferWise when relying on third-party service providers.
That being said, the blockchain will allow for much cheaper solutions in the long run. Bitcoin is still an effective alternative for users who send peer-to-peer payments without using third-party services. Business embracing cryptocurrency, however, will need to find a way to bring costs down to regain their competitive edge.
Moreover, these companies will face significant competition from existing and emerging players embracing distributed ledger technology in the coming years. Do not expect the transition to blockchain technology to occur overnight, though. Without making these solution appealing to customers, none of these efforts will succeed, though.
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