Overseas Filipino Workers (OFW) send money to their loved ones in the Philippines via certain international money transfer service providers. Cross-border payment solution Western Union charges up to $1.25 USD for USD remittance up to $500 USD. Also, they charge $1.65 USD for remittances up to $1000 USD. Interestingly enough, the transfer fees depend on the foreign exchange rates, which means that these charges are not fixed. In other words, the sender must cough up extra fees to make up for the differences. That’s not all. Sometimes, the transfers take days to deliver, compelling the recipient to wait. These are more reasons for widespread cryptocurrency adoption.
Bank-to-bank Transfers Attract Similar Charges for OFW
Bank-to-bank transfers are no exception to this rule as they attract similar charges. Indeed, the implication of all this is that OFW who use it to send money to their loved ones must stick to the rule. This process is similar to wire transfers that are relatively fast but experience a lot of stops before reaching their final destinations. While these charges may mean nothing to rich businessmen, they could also mean “paying too much” to a rural former who wants to send some money to his son studying in the city.
Introducing a Paradigm Shift and Potential For Cryptocurrency Adoption
No doubt, cryptocurrency can be the change the OFW and the farmer seek. Just like the farmer here, in the Philippines, some 86% of the households remain without bank accounts. However, they can send money to their loved ones with cryptocurrency, which relies on blockchain.
Since virtual currency transactions are paperless, nine times out of ten, they attract zero fees. Moreover, the sender can send the money to a family member that is hundreds of miles away, and the extra money will be used for footing other bills that require immediate attention. Isn’t that amazing? Yes, OFW can send the money to a kababayan, and the service will take money to their loved ones.
Impact of the Remittances
Although the charges may appear infinitesimal, they make a lot of difference at the national level in the Philippines and elsewhere. In January, Nestor Espenilla Jr., the Central Bank Governor, disclosed that the OFW remitted a whopping sum of $2.379B USD in fiat currency through the banks. Comparing it to January 2017 remittance, the statistics show that the country recorded a remittance increase of 9.7% in the year under review. In the light of this, OFWs contribute significantly to the national economy, making it the largest source of foreign exchange income. Regarding personal remittance, it rose by 10.8% in January, bringing remittance to a total sum of $2.655B USD. Indeed, these remittances are critical to the Filipino economy as they help to shield it from external market shocks.
On the other hand, one big challenge militating against cryptocurrency is liquidity. In the Philippines, merchants have yet to fully adopt digital currencies. However, an Indonesia-based company, Pundi X, is out to change this trend. The company is using Bitcoin (BTC), Ethereum (ETH), and NPXS to encourage Filipinos to start using virtual currencies.
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