If you’ve been looking for a great way to send money to family and friends overseas, you’re not alone. Sending money overseas, also called a remittance, is a massive part of the global economy. In 2019 alone, around 554 billion USD was sent in the form of remittances.
Unfortunately, people across the world have been struggling with the traditional means of remittance. Whether it’s the high fees or the slow speed, traditional remittances can feel outdated in modern times. If you’re interested in learning how to send money abroad in a safer and faster way—keep reading. We’ll break down a new way to send money to loved ones across country borders using Bitcoin (BTC).
The traditional model of remittances
There are several ways to send remittances, such as through a wire transfer, an electronic payment system, or by mail, but we’ll break it down for you step-by-step. Let’s say you want to send money from the United States to Nigeria, you probably have to go through these steps:
- Go to your nearest Money Transfer Operator (MTO) or a sending agent.
- Let them know how you will be sending the money to Nigeria. Is it through cash? A check? Also, let them know who you will be sending the money to, where this person lives, and how much you’ll be sending.
- The US agent at the MTO then takes all that information and tells the Nigerian agent all the info you’ve provided. They’ll also relay to the Nigerian agent how to deliver the payment. This step can also include converting the money from USD to Naira.
- Finally, the US agent pays the Nigerian agent.
While this may seem like a straightforward way to send money home, there are some flaws that come with traditional remittance methods such as:
When sending money through conventional means, there are typically high fees such as exchange rates and maintenance charges involved. Most fees are around seven percent and can even be as high as 15-20 percent. These fees mean sending less money to your family and more spending on the remittance process—no one wants that.
Most countries don’t make received remittances public, which means there’s no way to know what’s going on behind the curtain. Also, these “curtains” are heavily regulated. Many transfers happen online or through the wire, which means they can be easily tracked. This is too much transparency in all the wrong places and not enough clarity in the right places.
- Limited financial freedom
Some banks will set limits on how much money you can send. So, if you need to send a large sum of money to your family, you may not be able to do this.
Given that banks are closed for certain holidays and at certain times, your remittances are dependent on operating hours and the speed of the bank. This means your family’s finances rely entirely on a non-transparent entity that can be working at a snail’s pace.
Why send remittances using Bitcoin?
With the disadvantages of sending traditional remittances, it’s a no-brainer that people are looking for alternative ways to send money. Let’s discuss the reasons why Bitcoin remittances can be a good alternative to traditional methods.
Bitcoin remittances are not tied to banking hours or holidays. They are also way faster since you don’t have to physically go to an MTO to share your info. You can send remittances directly to your family from your home with fewer middlemen watching every financial move you make.
- No limits:
The amount of money you want to send is practically unlimited. When sending money with BTC, no gatekeepers hold the remittance key.
Bitcoin remittances are also cheaper since there are fewer fees involved with BTC transactions compared to traditional remittances. MTOs will often take fees and they’ll put them into the maintenance of their Remittance Service Providers (RSPs). In comparison, crypto exchanges take a much smaller fee when sending BTC and there can be lower exchange rates also.
Sending remittances using Bitcoin
Now that we’ve talked about how BTC remittances can be more effective, let’s get into how you can send money using Bitcoin.
- You and your recipient should sign up for an account on Paxful, a Bitcoin P2P exchange website.
- Verify your account—to ensure your safety, most exchanges will ask you to confirm your identity and follow other preliminary steps.
- Buy Bitcoin with a credit card, gift card, and other various payment methods. The great thing about this is there are no extra fees when buying BTC.
- Once you have a deal and complete the trade as prompted on the screen, you will have BTC in your wallet.
- Ask your recipient to send you their BTC wallet address.
- From your wallet, input your recipient’s wallet address and hit send.
- To cash out, all the recipient has to do is reverse the process by selling BTC on the same platform. Your recipient can get paid in any currency and through online wallets or other methods.
That’s all it takes. In just a few minutes, you can send a remittance from the comfort of your own home. All you need is a smartphone and a stable Internet connection—no need for bank accounts.
Despite the speed and convenience of BTC remittances, there is a slight downside. It can take certain people a little extra time to learn how to send BTC and master the world of peer-to-peer (P2P) exchanges. Also, once you send your BTC transaction, there’s no way to reverse the charge.
However, we still think that sending money with BTC and exchanges is more accessible. Learning the ropes of BTC remittances isn’t a huge hurdle. In fact, for many people, mastering P2P is pretty easy. There are many tutorials online and as long as you understand any potential risks ahead of time, it should be a breeze to send Bitcoin remittances. Just remember to always do your research and study your preferred platform before trading. As long as you do these things, your remittance process should go smoothly.
The future of remittances
If you still have reservations about BTC and new forms of remittances, it’s good to remember that this is only the beginning. BTC is revolutionizing the way we make payments and send money, and there will be more use cases for it. While you may hear non-crypto believers out there talking flack, keep in mind that it can only get better from here. BTC and crypto exchanges are relatively new compared to their traditional bank counterparts—so stay optimistic, stay curious, and give BTC remittances a try. After all, you have more to gain than to lose. Good luck!