By allowing an easy and cheap way to send money overseas, Bitspark can offset the negative data shown by the report of the IFAD on cost of remittances’ transactions.
Addressing the Problem
The study of IFAD shows the incredible importance of remittance in the APEC region and the tremendous difficulties people experience in receiving money transfers. Could there be an alternative solution?
The report from the International Fund for Agricultural Development (IFAD), "Sending Money Home to Asia", published in December 2014, states that the South-East Asian remittance market is perhaps the most diverse and active in the world in terms of remittance transfers. The data shows that in 2012 there were more than 60 million migrant workers who transferred approximately US$260 billion to their relatives in the APEC region. The statistics further indicate that this accounted for 63% of global flows to developing countries and 1 in every 10 households in Asia gained from these transfers. In the majority of the countries the volume of remittances approximately equaled 10% of their GDP. For instance, the Philippines received US$24.3 billion under the form of remittances and this makes it the third largest recipient of diaspora funds in the world, accounting for more than half of all remittances transfers to South-East Asia.
Despite the lack of direct taxation on remittances, the transferred funds are subject to many additional fees customers have to bear. As the report states, “Even though the average costs of sending money to Asian markets are below the global average, remittances to rural areas are still much more expensive" and as seen from the graph, the costs in the Pacific and China are much greater than the global average.
In addition, since the larger portion of the population of the countries in the region lives in rural areas, the lack of stable and widespread financial infrastructure as well as difficult access to urban areas poses a further obstacle for the relatives of migrant workers to receive the diaspora funds. The remittances originate from countries in the APEC region with highly developed banking systems, so this dysfunctional geographic mismatch on the two sides causes even greater difficulty for the recipients to collect their money. The overall cost of the transactions is estimated to be US$30 per transaction, or as the report simply puts it, “It is both expensive and inconvenient to be poor.”
There are many remittance service providers aiming at offering an alternative method, yet the costs remain extremely high: for the Philippines, MTO costs are averagely 5.9%, bank fees reach 10.9%, post charges are 15.2% and credit card fees are up to 17.6%.
Given this, there is a definite need to come up with a low cost transaction method that would allow the flow of savings reach its destination with as little disruption as possible.
Taking the Right Steps
Bitcoins offer a solution and Bitspark aims at taking advantage of this opportunity and change the traditional way of sending money overseas. By using bitcoins as an exchange underlying currency, Bitspark is able to push the costs much lower than other service providers, thus saving a great amount of money on the part of the engaging customers.
As the report states, “Remittances lift millions of Asian households out of absolute poverty, and provide millions more with the opportunity to improve their housing, health and education.” This is why Bitspark starts from here, recognizing the vital need for a change in this region that can then be extended worldwide.
It is crucial to raise awareness and educate the public about the alternative transfer method that can be taken advantage of today and make a huge difference. The more people who join the decentralized network, the more corridors for remittance transfers will be available and the access to needed funds in other developing regions will be simplified globally.