Dec 12, 2023

Traditional Remittance players experimenting with Blockchain

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Remittances play a crucial role in the economies of many countries, particularly in Low and Middle-Income Countries (LMICs). These financial inflows have been shown to enhance the overall well-being of citizens in countries that receive substantial remittances. However, there's a concern that an overreliance on remittances can be harmful, given that they're subject to the business cycles of more developed countries. In 2021, the global remittance volume was $781 billion, increasing to $794 billion in 2022. India led the list of recipients in 2022 with $100 billion, marking its position at the top for the past 15 years and achieving a new all-time high. Following India were Mexico with $60.3 billion and China with $51 billion. Although India's remittance inflow is immense in absolute terms, it represents only about 3% of its GDP. In stark contrast, the Polynesian country, Tonga, receives $250 million in remittances, which accounts for almost half of its GDP. The complexities in the remittance sector arise not just from regulatory challenges but also from the varied financial technology evolutions in different countries, which now need to interoperate.

Western Union

About: A 172-year-old financial and communication services company, Western Union is prominent for its money transfer offerings. Customers can send and receive money both locally and internationally via its network, using online platforms, mobile apps, or physical agent locations. Additional services encompass bill payments and money order purchases.


  • Global Reach: Present in over 200 countries with a revenue of $4.5 billion in 2022.
  • Agent Locations: Over 500,000 globally, with more than 61,000 in the U.S.
  • Transfer Duration:
  • Domestic: Typically within 24 hours.
  • International: Ranges between 1-5 business days.
  • Cash Pickup: Can be ready in minutes.
  • Direct to Bank: Generally 2-5 business days, though it can be faster or slower based on the destination country.
  • Bank Transfers: Up to three business days, contingent on intermediary banks.

Compare this with using USDC transaction speed on various blockchains:

  • Algorand: ~5 seconds
  • Arbitrum: ~3 minutes
  • Avalanche: ~2 seconds
  • Bitcoin: ~40 minutes
  • Ethereum: ~3 minutes
  • Flow: ~2.5 seconds
  • Hedera: ~3 seconds
  • Polygon PoS: ~20 minutes
  • Solana: ~400 milliseconds
  • Stellar: ~5 seconds
  • TRON: ~1 minute.

Comparatively, blockchain technologies, especially newer ones, facilitate much faster transfer times than traditional systems like Western Union. However, as they say, ‘If you can’t compete, then collaborate’, collaboration can be a powerful alternative to competition and with that spirit let’s look at some of the collaborations by Western Union and MoneyGram within the blockchain space.

Western Union and Crypto:

In 2015, Western Union had preliminary discussions with Ripple about a pilot settlement project but no concrete results were seen. In 2017, a pilot project with Coinbase was announced to integrate Western Union remittances in the Coinbase app, focusing on fiat remittances using crypto, but not actual crypto transfers. This project was not successful. At the same time, Western Union developed a blockchain-based KYC technology to cut their $240M yearly compliance costs.

In April 2019, Western Union partnered with, a Philippines blockchain startup, enabling Filipino residents to receive cash remittances limited to ~$2K/month. The effectiveness of this service is unclear, but it's still an option on Western Union's site.

MoneyGram, Ripple, and Stellar:

MoneyGram provides global money transfer and payment services, allowing users to send and receive money online, in-person, across borders, or domestically.

In 2019, Ripple acquired a $30M stake in MoneyGram, enabling the use of RippleNet for cross-border payments. By 2021, Ripple ended its partnership with MoneyGram, potentially due to SEC allegations against Ripple in December 2020, but there's hope to revisit the partnership later.

In October 2021, MoneyGram partnered with the Stellar Blockchain Network for cross-border payments using Circle’s USDC stablecoin, a significant shift from their Ripple relationship which involved the more volatile XRP token. Despite regulatory scrutiny of Circle by the SEC, MoneyGram maintained its relationship with both Circle and Stellar.

In August 2023, Stellar invested in MoneyGram, resulting in Stellar's CEO obtaining a board seat at MoneyGram.

A noteworthy point is the rivalry between Ripple and Stellar, stemming from a split between their co-founders, Chris Larsen and Jed McCaleb, in 2014. Both continue to compete in similar spaces in the crypto industry.

Stablecoins are poised to revolutionize on-chain remittances. Either new companies will harness this market, or existing industry leaders will ally with them to maintain dominance. A research collaboration between Uniswap Labs and Circle in January 2023 highlighted the distinctions between traditional and Decentralized Finance (DeFi) markets:

Source: On-chain Foreign Exchange and Cross-border Payments Research Paper

Overseas workers, people who move from one country to another primarily for work, often experience high transaction fees when they send money back to their home countries. As a result of these high costs, they might be encouraged to hold off on sending money until they can send it in larger sums, doing so less frequently to save on transaction fees. According to the research paper, the figure below displays the expense associated with sending a $500 remittance, as derived from on-chain transaction data and estimates provided by the World Bank.

Source: On-chain Foreign Exchange and Cross-border Payments Research Paper

These fees can significantly affect the amount of money the receiving families end up with. For families relying on this money for their livelihood, this reduction can be burdensome and can also impede economic development in the countries receiving the remittances. Stablecoins can streamline the remittance process by removing several intermediary steps, which are typically associated with additional costs and fees.

Want to read about how Circle and Hedera are changing the landscape of remittances? Coinchange’s research team has put together an extensive research report on Stablecoin Landscape and the Remittance Use Case, in collaboration with Circle, The Hedera Network, Myna, UnoCoin, Glo Dollar, Brale and Ethereum Enterprise Alliance. The report is divided into three sections:

  • Part 1.0 The Current Landscape of Stablecoins
  • Part 2.0 Current Remittance Landscape
  • Part 3.0 Upcoming Real World Projects Involving Stablecoins for Remittance

Click the link to show the full report:

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