Is Bitcoin Better for Individual Remittances?


Does transferring money (for remittances) with Bitcoin, really save you money? This is a question I get asked a lot, so I thought, why not answer it.

Transcript

Hello my name is Faisal Khan. I’m a banking and payment consultant. And the question I’m answering today is: Is bitcoin a better alternative for international remittance players. Is it – will it bring the charges down or is it more cheaper to use bitcoin for remittances?

The answer is marginally; marginally it is better. If you look at how a transfer has done to you have to transfer from Chicago to Manila. So in Chicago you have to go to some bitcoin exchange, you have to buy bitcoin, you will then transport that bitcoin, send that bitcoin to a exchange in let’s say Manila which will then sell, you know, the bitcoin in the local exchange and give you the equivalent in Filipino Pesos. In this transaction you probably you probably paid half a percent fee in for a bitcoin purchase in Chicago. And likewise you’re gonna pay about half a percent fees for the bitcoin sale in Manila. And let’s hope that during this time the Bitcoin price does not fluctuate so as to cost you any negative impact but basically in the long and short of it you’ve probably paid between let’s say if on a very competitive basis point seven five percent three quarters of a percent to maybe a percent maybe even a percent and a half.

Now if you look at this saving or this cost that you have with respect to the saving you will do over a traditional remittance, how much is that? Let’s say the Chicago to Manila corridor is operating at 3 percent, so are you going to save a lot. 3 percent of a thousand dollars is you know 30 dollars.

One and a half percent on a thousand dollars is 15 dollars, you say 15 dollars and that may be a big big enough amount for you or not. If you’re typically doing remittances for small amounts, then the savings aren’t that big especially if you’re planning to do it as a business where you are now have to incur compliance costs and the cost of KYC etc. But if you’re doing it on a one-off basis, sending money to your relatives, it may be cheap. It really makes sense when you go into the big numbers, when you go into five thousand dollars or ten thousand dollars and you’re doing that every month. Then yes the savings can be considerable but the exchange fees will also be there. So you will always be paying half a percent or point two five percent or what have you. It may be a better option to go and use Ethereum rather than bitcoin. Some exchanges may offer a lower exchange or transfer transaction fee on ethereum. But typically if you’re gonna use a crypto currency like bitcoin and ethereum and the likes to do cross-border money transfer the saving is marginal, marginal at best.

It comes with the caveat that this question was specifically asked for remittances as an individual user or as an individual business, does it make sense to use bitcoin for purposes of transaction. So.

If you have any more questions please feel free to ask and I’ll be happy to answer them. Thank you.