The innovation arm of newly acquired Visa Europe has announce it is partnering with distributed ledger specialist Epiphyte on a proof of concept project that would see the Blockchain technology used for international remittances. With the 2014 remittance volume estimated at $582 billion there is a significant opportunity for banks and others to use new technologies to bring down the cost of money transfers and capture some of the current volume.
Commenting on the prospect of digital currencies being used for remittances, Jon Downing, innovation partner, emerging payments at Visa Europe Collab said,
“There is a real opportunity to develop an improved remittance service for both the sender and receiver of payments in terms of fees, speed and ease of use. That’s why we’re proactively exploring the area with Epiphyte, to see if the protocols and processes involved could be improved by utilizing blockchain technology.”
With migrants paying an average of 7.9% in fees on these money transfers, the current cost to money transfers is a significant barrier to economic development and wellbeing in many developing countries. While mobile and only based remittance providers have emerged in recent years with lower rates than the large agent based incumbents, the blockchain and digital currencies might offer the best way of ultimately bring the cost down.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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