The money transfer market is in a state of flux right now, as a number of structural challenges become increasingly apparent. While institutions like the World Bank and financial corporations have initiatives in place to resolve some of these challenges, the situation continues to deteriorate to the detriment of millions of families across the world who rely on remittances as a lifeline supporting basic living expenses.
If you need to send money back home, one of the best options available to you would be going to a Money Transfer Operator (MTO). However, MTOs are increasingly being targeted and their position is at risk. That’s why we have designed our remittance service to empower local MTOs, so that they can make more money and serve more people. The result is a healthier remittance industry where senders and receivers have access to financial innovation to transfer money in a way that is cheaper, faster and more reliable than anything else available today.
The remittance industry is trying to squeeze out MTOs Operators that have dominated the market for a long time, like Western Union and MoneyGram, are still dominant today. They control large networks of remittance corridors and are therefore in a position to set high prices to a point where some fees could end up being 15% of the transaction.
Banks have moved into the market, however most are pulling back their low cost remittance services under renewed focus on Anti Money Laundering and Combatting the Financing of Terrorism (AML-CFT) regulations. Even worse, banks are questioning their role in the market entirely and some are exiting their relationships with MTOs by closing their accounts. Sending money overseas is still possible through the banking network, but if you have ever sent money from your bank account to another account overseas, then you know how expensive a transfer like this can be.
As more banks are moving away from the remittance industry, many smaller MTOs have had to close since they could no longer operate without bank accounts. This has had a terrible effect on the remittance costs worldwide. The cost of sending remittances from Australia to the Pacific Islands, such as Fiji and Samoa, is above 10%. Most remittance corridors to Sub-Saharan Africa have transaction fees above 10% as well.
All of these developments together have almost removed MTOs from the payments ecosystem which has reduced competition, encouraged the use of informal channels and increased remittance prices. If we are going to solve these challenges in a way that has a real and lasting positive impact on the people that rely on remittances for their basic living expenses, we need to strengthen the position of MTOs in the industry.
MTOs are key to a better remittance industry
With the right tools, MTOs are in the best position to serve the 250 million migrants worldwide that earn a living abroad and send money back home to their families. One of the most important reasons MTOs have the advantage, is that their services have a large cash component. Looking at all the innovative wireless and mobile payment systems we have today, you may have thought that cash is dead. But for the most part, cash is still very much alive and well.
Cash has the largest share of consumer transactions worldwide at 40%, and in the Philippines 98% of all transactions are cash-based. In fact, according to the World Bank, 41% of remittances are done using cash. The preference for cash starts to make more sense when you factor in that there are 2 billion people worldwide who do not have access to bank accounts or any of the banking infrastructure. The ‘unbanked’ need cash-friendly remittance services, and MTOs are in a position to provide that.
What we are doing, is digitising the process that sits between the cash in, cash out system using cryptocurrencies to empower MTOs.
Empowering MTOs with a revolutionary service.
With our service, MTOs are able to send and receive money faster and cheaper without ever relying on bank accounts. It takes away their biggest risk factor and lowers the barrier to entry for local MTOs to set up shop and more easily turn a profit. Enabled by the BitShares Blockchain, our services use cryptocurrencies pegged to the value of fiat currencies to transfer
money across borders.
MTOs buy and sell fiat cash from senders and receivers using the Sendy mobile App, which lowers or increases their digital balance of a related fiat-pegged crypto. So if an MTO has a digital balance and wants cash, a Sendy users will sell cash in return for a higher digital balance. The money in the digital balance is used for overseas transfers. At the destination point, the reverse scenario happens where a recipient Sendy user wants to sell digital crypto for fiat cash and goes to an MTO to cash out. It’s essentially a global cash in, cash out remittance network with fiat-pegged cryptos as the connecting thread. And with the BitShares Blockchain, we can create fiat-pegged cryptos for all of the world’s 180 fiat currencies to cover each remittance corridor and currency pairing imaginable.
With this design, our remittance network does not rely on the banking infrastructure to transfer money across borders. This means MTOs are no longer put at risk as more and more banks move away from the industry. It also lowers the barrier to entry as it’s much easier for local entrepreneurs to click into a system like Bitspark’s, and set up their own MTO service. This should return competition to a market that has been dominated by a few players for too long.
Bitspark is available to all MTOs globally, with local fiat-pegged cryptocurrencies to support every country in the world.
Our service will always be a free option for MTOs, and they can set their own fees which will be split 50/50 with Bitspark keeping appropriate market pricing in their location, enabling fee reduction while gaining profit margins. To make it even easier, we provide the ability for all customer due diligence information to be stored on Bitspark’s database from time of account creation so that when customers deposit and withdraw, AML/KYC information
through paperwork is eliminated.
All of this combined offers a revolutionary experience. Using Bitspark Sendy, a customer can top up a balance within a few seconds and also pick up and collect money in approximately 15 seconds. No banks involved.
Providing an extra boost with Zephyr
Our network helps MTOs make more profits with a service that’s cheaper, faster and has the potential to reach more people as the process works without banks. But we have designed a few extra features for MTOs and Sendy users to make even more profits: incentive and reward mechanisms wit Zephyr.
New members are rewarded Zephyr for joining the Bitspark remittance network, a move which will accelerate the growth of our network. Zephyr will also be used to reward and stimulate user activity. Any action you take that is economically beneficial to the global remittance network is rewarded with Zephyr. This means that with every transaction and top up for a Sendy user,
MTOs will receive Zephyr. The same goes for Sendy top up agents that will be rewarded with Zephyr for successfully topping up the digital balances for Sendy Users.
To support the long-term utility and value of Zephyr, Bitspark uses 25% of transaction fees to buy back Zephyr from the market on the BitShares Decentralised Exchange. This mechanism puts Zephyr at the centre of a positive feedback loop between network growth, usage and value
which is to the benefit of everyday users, token holders and traders. MTOs that join early have the advantage as their initial Zephyr reserves keep increasing in value as the network grows.
Enhanced information, transparency, competition, and cooperation among partners could put millions of dollars back into the hands of the needy.
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