Companies will grant their customers the ability to pay with bitcoin only if they ask for it. A large volume of remittances comes from the more developed markets.
Remittance companies based in El Salvador have already clarified that they do not intend to support cryptocurrency unless they receive demand from customers.
The information appeared in Reuters on June 14, 2021. The news agency consulted Kenneth Suchoski, Fintech analyst at Autonomous Research, who expressed that local companies will only start offering their customers the chance of paying with bitcoin if they ask for it.
For Western Union and some of the other remittance providers, most of the volume in the remittance industry comes from developed markets to emerging markets, primarily destined for individuals – families, and friends – who operate with cash, according to the analyst.
Also, less than 1% of cross-border remittances worldwide are carried out with cryptocurrencies. Therefore, companies would be forced to make an effort to adapt their systems to support bitcoin in case there is the possibility of using the cryptocurrency to a pretty low number of customers.
It is worth considering that there are already some companies in the Central American country that permit the sending of remittances with bitcoin. This kind of transaction is possible from that date through the application for sending and receiving funds.
Increase Share of Cryptocurrencies in the Remittance Market
During an interview with the news agency, Suchoski also stated that in the future, cryptocurrencies will account for a larger portion of $ 500 billion annually in global remittances, a high peak that the World Bank is also predicting.
The international organization predicts that the flow of remittances to Latin America will have a significant downfall of 8% during the year 2021, the main reason is the pandemic.
In recent years, the sending of remittances to low-income countries has gained more relevance in the markets of many world economies. And bitcoin, although it is off the radar, has played a major role in this situation.
According to a series of studies of the World Bank (WB), 2018 was the year in which a historical maximum of remittances happened and got registered, with flows of USD 529,000 million. The agency forecasts that between 2020 and 2021 there will be a big decrease of around 14% if compared to 2019.
On the other hand, the Chainalysis geographic report had shown a few months ago that the need to send remittances has boosted the interest of Latin Americans in cryptocurrencies. This mainly due to the obstacles that the population has to access the traditional banking system, and the inflation that affects several countries in the region.
For most analysts, the issue of remittances is key in Latin America, taking into account that they represent 1.7% of the region’s total GDP. By relating this fact to the transactions detected in the Bitcoin blockchain, the firm detected a balance.
It is also important to consider that bitcoin, as the most famous cryptocurrency in the ecosystem, brings a fast and inexpensive way to send money across borders, without depending on the channels and intermediaries that participate in the traditional remittance system.
By: Jenson Nuñez
