New technologies make remittance faster and safer
Read this article to know how technology is changing the way people make remittance faster and secure. Know the latest innovations in the business of internal money transfer and how it affects you.
Thanks to the new developments we are getting close to achieving instant and free online money transfers…
We can easily notice the rapid change in the past few years when it comes to our methods of handling the money. Most banks offer online banking services and you can easily access your digital wallet on your mobile and transfer thousands of dollars with just one tap of a finger. Moreover, the most revolutionary change in our personal finances is that we don't need to rely purely on banks anymore. With the abundance of independent online platforms, one can simply choose the best service. However, the current costs of sending money internationally are still quite high. According to the data from Wirly.com which specialize in analyzing remittance prices: "for every $100 sent, only $92 really gets to the recipient." That's why the developers are trying very hard to create efficient systems, which could help lower the transfer costs and increase the overall security.
So, how do online money transfers work right now?SWIFT, bank wire and old-school transfer solutions
It probably shouldn't surprise you that when you issue an online payment, the physical money doesn't really move from one place to another, but the information and its banking data does. Currently, most of the banks and financial institutions are using SWIFT network. It allows banks to message each other in a safe and standardized way. However, the operating costs are quite high because of the intermediaries and it still takes a couple of days to set up the deal.
There are also companies such as Western Union or MoneyGram, which with enough branches established all over the world, allow people to transfer money internationally by bringing the cash in person to their local facility. Then, after only a few minutes the recipient can go to the facility in his own city and pick up the same amount.
A similar approach to sending money has been introduced by some independent remittance platforms, which introduced such peer to peer systems online. For example, Venmo is a mobile app, which allows you to send money to other Venmo users for free. InstaRem uses p2p to bring cheaper exchange rates for currency conversions. The platform provides users with a "marketplace" where they can directly connect with each other. The downside of this method is that both the sender and recipient need to be registered on the platform. On the other hand, because everything happens "within" this system, the transfers cost close to nothing.
And what are the most innovative and game-changing technologies in the remittance industry currently?Improvements in international online money transfers
No need to remember bank numbers
The first interesting aspect taken on by talented developers is a helpful extension for mainstream banks. Currently, in order to send money to someone you need to know their long and hard to remember account number. Moreover, you will most likely need to provide some additional information such as bank's name, location or codes like IBAN, BSB or others. The introduction of a special system, which stores all this information for you makes it much easier to order bank wires.
PayID allows you to create an easy to remember account name/number. You can set for example your email or phone number to act as your personal banking ID. Now, when someone wants to send you money, all you have to give them is this short ID. Currently, this feature is being tested with Australian banks, which offer their customers the ability to "simplify" their account numbers.
It makes sending the money easier and you are less likely to type the address wrong.Blockchain and digital crypto transfers
The potentially most innovative technologies, which has been developed in recent years is the blockchain. You may have heard about it being mentioned alongside cryptocurrencies, which are these new digital coins. It's because Bitcoin, which is the first and most popular cryptocurrency, is the first project that used this technology.
Cryptocurrencies are purely digital coins. You need a special app to store them and order the transfers. To show the power of these coins let's mention Ethereum as an example. ETH is the 2nd largest crypto coin right now. It costs $0.2 to send any amount of money to any place in the world. Moreover, the transaction will be delivered within few seconds.
The current problem which prevents the wider adoption of cheap crypto transfers is the uncertainty on the market. There are no official government regulations and some crypto coins change their value by a hundred percent in a matter of hours. It may be great for market speculators, but it is terrible for someone who wants to simply store, spend and send money.
Many people connect blockchain immediately to market speculations, cryptocurrency scandals and other related controversies, as there are mixed opinions about these new digital coins and other features of this system. Putting this aside, the blockchain itself offers very secure storage of information, as it's heavily encrypted. With today's computing power, it's impossible to break this security. Moreover, looking at the costs of transferring the cryptocurrencies built on blockchain, one can notice how cheap it is to send them from one wallet to another, even if the recipient is at the other side of the world.
There are already attempts to "digitize" currencies such as USD and create their blockchain-based crypto alternatives. That way, one doesn't have to worry about crypto market fluctuations, but can still benefit from the fast and cheap transactions.RippleNet - faster alternative to SWIFT?
Using the just mentioned blockchain technology, Ripple has created a new type of network for banks and financial institutions to exchange information with each other. The key benefits of using blockchain for this type of communication is the high level of encryption and overall reliability of the system.
Some of the major financial institutions have already decided to switch to this network. Remittance platforms who adopted it are now able to offer money transfer services in many countries, as it makes it easier for them to establish connections even in the most remote countries. For example, TransferGo managed to decrease costs by up to 90 percent in some regions. Moreover, the transfers can be processed in only 30 seconds.The future of remittance
Undoubtedly, the new technologies will have an impact on how we handle personal finances. It is becoming much easier to send money to people all around the world. That way we can benefit from goods and services globally and also establish new business connections and partnerships.
Currently, there are hundreds of platforms, who offer international remittance services and it may be hard to choose the best offer. You can compare the in-depth stats, fees and transaction speed of banks, remittance platforms and cryptocurrency transfers by visiting www.wirly.com. That way you can learn which service is the cheapest, fastest or most secure.
