There is a bunch of bitcoin remittance providers and here you learn what makes each provider unique. At the end you can apply it immediately!Read More
Bitcoin Remittances refer to the physical act of sending money as a payment form.
Normally, the payments are sent out by foreign workers in far-flung countries looking to ensure that their friends and family members back are well provided for. But there’s a problem, in that using the traditional methods is not only pricey, but it’s also time-consuming.
Legal entities such as banks and other financial institutions often insist on the use of account-based transfers. It’s a move aimed at curbing money laundering as well as fighting fraud. And while there are other options to remit money, e.g., through the use of MTOs (money transfer operators) such as MoneyGram and Western Union, the reality is that their fees are too high.
Enter Bitcoin remittances!
The development and eventual growth of P2P (peer-to-peer) platforms have brought with it numerous benefits for people looking to send money to Africa. Such platforms allow foreign based workers to use cryptocurrencies and Bitcoin to support the people they care about. Today, remittance has become a leading real-life use of BTC.
Even though the process of remitting BTC is similar to the one used in traditional methods, the former is faster and far cheaper.
It gets to do away with the red-tape and bureaucracy that is common with traditional cross border payments.
Inward Remittances | Sending money to an African Country
Given that the African Diaspora community can generate a good income, many foreign based workers are always willing to share the money earned with those they left back home. The money can be for medical purposes or to pay for a bachelor's degree. When wiring money from abroad to an African country, the process is termed as an inward remittance.
Remittances are traditionally a good source of cash flow (foreign) for many developing countries. In 2019, for instance, many countries saw an increase in inward remittances, with some reporting an increase of up to four percent. That year saw inward remittances to Africa hit the $65-billion mark, with Egypt, Kenya, Ghana, and Nigeria leading the pack.
This particular growth was attributed to a need by immigrants to invest back home, as well as to the notable recovery of economies around the world. But even as new countries start to adapt to technology that will make it easier to send and receive money, the reality is that it’s still hard to remit money to African countries.
Common methods used to remit money include the use of wire transfers, checks, and online transfers. Mobile money transfers have also become a popular option with Azimo, Xoom, and WorldRemit being the most favored. However, this is only good for inward remittances. The people in Africa can use them to receive money, but they can’t send money to loved ones abroad.
Outward Remittances | Sending Money Out of an African Country and/or Between African Countries
An outward remittance is commonly described as the process of sending money from a native (African) country to a foreign country. Recent studies have suggested that it’s more expensive to send money abroad or to another country within the African region than it costs elsewhere in the world.
The implication here is that there are too many hurdles which when combined tend to complicate the process of making outward remittances. Figures obtained from the World Bank have shown that remittances to countries outside Africa, and within Africa from a native country cost around 10 percent of the payment being made.
Fees alone are a hurdle, as it means that the recipient will end up receiving less money than what was initially intended. In other parts of the world, the remittance fee currently stands at 7 percent. This means that it's cheaper to send money from the US to Ireland than it is to send money from South Africa to Zimbabwe.
Another hurdle comes in the form of excessive regulations put in place by the banking facilities and financial institutions. For instance, a person sending money from an African country will need to have a bank account from which they can send this money. While this has been implemented to reduce money laundering, it still ends-up inconveniencing many people.
You have to keep in mind the fact that a large percentage of the African population is unbanked. The lack of access to traditional banking facilities means that they can’t use them to make either outward remittances or even receive money from their loved ones working abroad.
And this is where the real benefits of using Bitcoin are left by its users. Bitcoin is not only a fast method of making cross border payments, but it also doesn’t have many restrictions. No bank account is needed for one to send or receive money. Additionally, its users don’t have to worry about satisfying stringent banking regulations.
All they need is access to an e-wallet, and voila! The benefits of using Bitcoin couldn’t be explained in a more simplified manner than this.
Procedure to Follow When Making Bitcoin Remittances
When it comes to Bitcoins and any other cryptocurrencies for that matter, you don’t have to worry about purchasing a whole Bitcoin. You can always opt to send a fraction of your current crypto asset to your loved one. That fraction will still be accepted and put into use where you intend to send it.
When it comes to making cross border payments, you need to know that it requires you to follow a multi-step process. And while there are many ways you can use to load your e-wallet, we chose to use Coinbase for this particular demonstration. The process to keep in mind is as follows:
Start by Downloading the Coinbase App
• If using an iPhone, head to the iTunes app store and download the Coinbase application. For those using Android smartphones, the app is readily available on the Google Play Store.
• At this point, make a mental note that whichever person you intend to send the crypto asset will need to have a BTC wallet, e.g., Coinbase if they already don’t have one. This is where they will store the currency once you have sent it to them.
• Coinbase is a leading crypto wallet which is why we chose to use it for this demonstration.
• On the login screen, make sure to create an account as you prepare to get started.
Include a Payment Method
• On the home screen, you will need to locate the “buy” button and to tap it. Tapping it will prompt you to add your preferred payment method.
• The next step is to include a bank account if you intend to buy BTC in large amounts. If looking to buy smaller amounts, you can choose to use your debit or credit cards.
• It doesn’t matter which option you choose to go with as the transfer will be completed immediately.
• Click on the Coinbase app icon to open it. proceed to the “buy” section located on the lower section of your screen.
• In the space that appears, make sure to enter the dollar amount that you would like to buy. The app will then indicate how much BTC you can get for that amount.
• Proceed to the top right corner and tap on the “buy” button once again
• At this point, you should note that your bank may send you a message informing you of a possible fraudulent transaction occurring in your account. You have to clear this with the bank. Normally, a simple call should get things cleared up allowing you to proceed with the transaction.
At this juncture, you are now ready to start transferring Bitcoin to your loved ones back home
• Locate the Accounts button which is normally at the bottom section of the Coinbase app
• Tap on the BTC wallet to know how much BTC you have at your disposal
• Head over to the top-right corner and tap on a smaller button labeled “send.”
• Submit the amount that you would like to transfer to your people
• Enter the recipients' Bitcoin address or email address.
• Hit send
• Voila, the crypto assets have been successfully sent!
Receiving Bitcoin and Converting it to Fiat Money
There’re several ways that a recipient can use to cash out the BTC sent to them. Popular methods include the use of cryptocurrencies exchanges, Bitcoin debit card, and Bitcoin ATMs. Given that we used Coinbase to upload and send the crypto asset, we will show you how to cash-out using the same method.
I. Start by registering and opening an account with Coinbase
II. Set up the account by following the prompts
III. Having completed steps 1 and 2, it’s now time to sell. Head over to the top section and click on the buy/sell tab.
IV. Click on sell
V. The amount to cash-out will be shown on your BTC wallet. Check your local currency to also determine how much you can withdraw.
VI. Exchange the BTC to your local currency before completing the withdrawal process
VII. Click on ‘sell’, and the crypto assets will automatically be converted to the local currency
VIII. Proceed to the fiat currency wallet and click on withdraw. The money will instantly be transferred to the mobile wallet or bank account provided during the setup process.
Disadvantages of Using Bitcoin Remittances
Lack of Regional Regulation
Lack of regulation continues to be a major setback as far as the growth of cryptocurrencies is concerned. In the case of African countries, you have to remember that they all have varying financial infrastructures. And while many governments have continued to make substantial steps towards regulating crypto assets, producers and consumers continue to face daily risks.
Common risks faced by producers and consumers include volatility in its pricing and the potential for use in funding criminal enterprises. Governments haven’t been left behind as well as they also face risks, many of which are experienced in the form of economic threats.
International Exchanges and Providers Are Not Available and Supported in All African Countries
Another major problem facing crypto assets in African countries is the lack of access to international exchanges and Bitcoin providers. Different countries around the world have been adapting crypto assets at different paces. The same case also applies to African countries.
Unlike Europe, the UK, and the US where exchanges and Bitcoin ATMs are readily available on the streets, and in malls, the same can’t be said about Africa. Some countries such as South Africa are leading the way in terms of adoption, followed closely by Kenya and Egypt. What these countries have in common is the fact that they have readily adapted crypto assets.
Some have web based exchanges where consumers can buy and sell crypto assets, while others have businesses that accept crypto payments. Considering this, it’s clear that it might take a while before the unbanked population gets to benefit from Bitcoin.
Lack of Awareness of Bitcoin Possibilities Combined with “Cash Is King” Perception
Lack of access to crypto-related information also poses a problem for the crypto-asset. While it’s the right tool to use for sending and receiving money, not everyone in Africa is convinced that technology is here to help them. For a large percentage of the unbanked population, they still believe that “cash is king.”
While some of those holding on to this theory are the elderly, you will still find groups that aren’t open to change. These are groups that would rather stick to the current methods, than trusting a ‘tech tool’ with their hard-earned money.
Advantages of Using Bitcoin Remittances
Low purchase / sale fees
If the two to three percent merchant fees you pay to banks are a drain to your cash flow, then it’s time you considered shifting to BTC. BTC transactions typically cost between zero and one percent.
Yes, you read that right. You can accept or send BTC payments without having to pay any fees. And given that BTC doesn’t require a bank to verify any of the transactions performed on its chain, you never have to worry about sacrificing your revenue to banks again.
Keep in mind that these are the same banks that own all your credit cards and business loans. With BTC, you may have to pay a small fee every once in a while to ensure that your transactions occur at a much faster pace.
Short Transfer Duration -> Instant Transfer
Your credit card funds can get locked for as long as seven days, and in some cases even longer. This often occurs when clients request for a chargeback. This will then translate to payment delays for no valid reason whatsoever.
But this isn’t something you expect to happen when dealing with cryptocurrencies. Crypto assets are much quicker compared to conventional methods of sending payments. The money you want to remit will be sent immediately you hit the send button.
The recipient will, therefore, have access to the money within a few minutes.
Global Approach and Availability
Small online retailers and sellers normally don’t get a chance to sell their wares online or offer services due to the high cross-border payments.
The fact that BTC is global means that it goes a long way towards helping foreign workers and small business retailers to send and receive payments with ease.
Global availability and approach also mean that its payments are faster, cheaper, safer, and easier for all users.
Using bitcoins for your every day operations is easier than you think in the beginning.
The biggest hurdle is to sign up at the various bitcoin remittance providers and to verify your accounts. That's a bit nasty.
The rest of it is just enjoying it. Enjoy the new freedom, the low fees and the instant results.
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