Making cross-border money transfers was quite a hassle in the past due to slow transfer times, currency conversions, and high transaction fees. But thanks to the rise of blockchain technology and cryptocurrencies, the trend for remittances changed rapidly.
Nowadays, users can send crypto instantly to users in other countries, and with much lower fees, using an innovative crypto payment platform or exchange.
What Are Crypto Remittances?
Crypto remittances are the process of using cryptocurrencies to send money across borders. This method of money transfer is quick, secure, and cost-effective, making it an attractive alternative to traditional remittance channels.
Crypto remittances are usually decentralized, which enables users to send and receive funds directly without intermediaries. This has been revolutionizing the way people make cross-border money transfers, providing greater financial access and inclusion to people all around the world.
See also: Cryptocurrency Marketing Strategies
5 Common Advantages of Crypto Remittances
Crypto remittances offer several advantages over traditional methods of sending money across borders, such as, but not limited to, the following:
- Low transaction fees (sometimes even free)
- Speedy transactions
- Easily accessible
- Greater control over your funds
- Reduced risk of unauthorized transactions
1. Low transaction fees (sometimes even free)
Crypto platforms offer a much cheaper alternative for remittances because they eliminate the need for intermediaries such as banks, which usually charge higher fees for their services. Also, cryptocurrencies usually have lower transaction or gas fees compared to traditional currencies, which can be significant when transferring large amounts of funds across borders.
A World Bank report says that the average cost of sending remittances was 6.3% in the third quarter of 2022. Meanwhile, the cost of crypto remittances can be as low as 0.01% to 0.10% of the transaction value. Some platforms, such as Ka.app, even offer crypto remittances for free when the recipient accepts the same cryptocurrency you sent (e.g. if you sent them KASTA and they receive it in KASTA as well).
2. Speedy transactions
The turnaround time for crypto transactions may range from instant to a few hours, depending on the platform you use. For instance, in Ka.app, a crypto payment platform, you can make cross-border fund transfers within just a few seconds.
Being able to process remittances in seconds is far greater than many other traditional means which may take hours to a few days to reach the recipient because of approvals, verifications, or paperwork.’
3. Easily accessible
Crypto remittances eliminate the need for intermediaries such as banks or money transfer operators, which can be costly and time-consuming. As long as they have an internet connection and a crypto wallet, users can send and receive funds directly without any middlemen.
Finally, crypto remittances are often more affordable than traditional remittance methods. Since there are no intermediaries involved, fees can be significantly lower, and users can save money on transaction costs. This makes crypto remittances a more accessible option for people who want to send and receive money across borders, especially those who may not have access to traditional banking services.
4. Greater control over your funds
Cryptocurrencies offer greater control over one’s which can be especially beneficial for individuals who live in countries with unstable or unreliable banking systems.
5. Reduced risk of unauthorized transactions
Crypto transactions are often secured using advanced encryption techniques, which make them less vulnerable to theft and fraud. Also, since cryptocurrencies are decentralized and no central authority has control over crypto transactions, they cannot be manipulated or blocked.
What platforms can be used for sending payments using cryptocurrency?
Different crypto platforms can be used for sending payments. You have to consider the charges, reliability, and speed. One such platform is Kasta. The video below shows how you can use this for remittances using cryptocurrency.
Challenges of Crypto Remittances
Using crypto remittances offers several benefits, but it also comes with several challenges. Some of these are regulatory uncertainty and the process of exchanging fiat for crypto (and vice versa). The lack of crypto regulation in some countries may create additional risks and complexities for both the sender and receiver of cryptocurrency remittances.
Another potential challenge is limited acceptance. While crypto adoption is growing, they are still not widely accepted by merchants and service providers. This can limit the usefulness of cryptocurrencies for remittances and create additional barriers for the sender and receiver.
Crypto remittances are revolutionizing the way we make cross-border money transfers, offering various advantages over traditional remittance methods, such as faster transaction times, lower costs, greater accessibility, and greater control over one’s funds.
However, as with any emerging technology, there are risks and challenges to consider. Conduct thorough research and use reputable platforms when sending crypto remittances to avoid or limit such risks and challenges.Last Updated on July 14, 2023 by Nansel Nanzip Bongdap