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Blockchain’s Effect on How We Make and Receive Cross-Border Payments

Blockchain-based smart contracts, like the FintechCoin Contract launched on the Ethereum blockchain, are making their presence felt in the overseas money transfer industry. Ripple appears to be at the forefront of using blockchain to disrupt the international remittance industry. MoneyGram was the first overseas money transfer company to put Ripple’s smart contracts through a testing phase, and next to follow was Western Union

Ripple has also found a taker in a leading French bank, Crédit Agricole, that is also putting smart contracts through a trial period. Others banks may follow suit soon, given that banks have already started using blockchain technology to create a real-time global network.

The Changing Landscape

According to the Pew Research Centre, cross-border remittances have witnessed a growth of 300% since 2000. More than U.S. $570 billion was sent in remittances by migrants in 2016 alone. These numbers do not include business-related transfers.

Before FinTech companies entered this field, it was dominated by banks and a limited number of high street forex brokers. Now that FinTech companies such as FC Exchange, TransferWise, WorldFirst, and WorldRemit have access to the speculative foreign exchange market, they have leveraged technology to make cross-border transfers more cost-effective.

Are Overseas Crypto Transfers Already Possible?

Yes, they are. While only a handful of the well-established money transfer companies are looking at what blockchain has to offer, there are some startups that are using this technology to facilitate cross-border transfers. They include:

  • Abra
  • Ripple
  • BitPesa
  • Circle
  • ph
  • MOIN

Benefits of Going the Blockchain Way

A World Bank report on remittance prices shows that you will need to pay an average of 7% as fees to make an overseas money transfer. The average cost of using banks is close to 11%, where if you turn to a FinTech alternative, you’ll still pay an average of 5.3%. Bear in mind that even when you use a FinTech company to transfer funds, banks still handle transactions at both ends.

If banks are no longer part of the process, costs can come down significantly, and this is a promise blockchain holds. Besides, while overseas fund transfers that involve banks may take days, blockchain-based transfers can go through almost immediately.

Another benefit of blockchain is the security it offers. Since blockchain is decentralized, unlike banks and conventional money transfer companies that are centralized, it is not vulnerable to cyber attacks. Every transaction that takes place using blockchain is marked by a distinct entry in a completely digital ledger, and entries cannot be fudged. Besides, the occasional problem that blockchain faces is usually user-generated and addressed in haste.

A Possible Drawback

A problem that cryptocurrency transfers currently face is getting exposed to currency conversion twice. Consider this – you want to transfer money from the U.S. to the UK. First, you use U.S. dollars to purchase a cryptocurrency. Then, the recipient will need to convert the cryptocurrency to British pounds. However, if the sender and the recipient already use the same cryptocurrency, this is not a problem.


Ripple’s collaboration with MoneyGram and Western Union has paved the way for blockchain technology to make a big mark on the overseas money transfer market. Given the benefits on offer, it’s only a matter of time before its use becomes commonplace.