Bitcoin and mobile messaging have emerged as tools in addressing the global remittance market to lower the cost of transferring funds across national borders. This past spring, KakaoTalk, based in Seoul, South Korea, a chat app, purchased a 40% stake in Satoshi Citadel Industries (SCI), a Manila, Philippines bitcoin startup as reported by Quartz . KakaoTalk joins Viber and WeChat in addressing the global remittance market, estimated at $500 billion annually. Transfers Are Complex A cross-border money transfer requires the parties to agree on a transfer method, calculate exchange rates, collect personal details, synchronize amounts, then confirm when the cash has been sent and received. Most such transfers are sent by migrant workers who relocate to other countries for better-paying jobs. They send money to family or friends back home who depend on the money for living expenses. An estimated 230 million people send $500 billion annually in remittances. They mainly use Moneygram, Western Union and RIA, which collectively have 1.1 million retail locations and comprise more than a quarter of the annual remittance market. Chat Apps Open Up The Market Smartphones, which have grown in use, have allowed chat apps to play a bigger role in these transactions. Both WeChat and Viber this year partnered with Western Union to enable U.S. users to send money to foreign beneficiaries from within their respective apps. Such cooperation could help logistical challenges facing remittances, but cost remains an issue. Sending $20 to the Philippines from the U.S. using Viber and Western Union requires a 4% foreign exchange fee and a $4 flat fee. Once the money converts to the Philippine peso, it arrives as $15.15 at its destination, amounting to a $5 loss. Most Asian migrants, who are construction workers, crewmen and domestic helpers, transfer the equivalent of $200 monthly, which […]
