Capgemini says nearly half of the world will use cryptocurrencies to send money over the next two years – a revolution led by remittances
- A new report from Capgemini estimates that around 45% of users will use cryptocurrencies to make payments by 2023.
- Using solutions like
Ripple‘s XRPThe protocol makes sending money to other countries faster and cheaper.
- Nigeria, Vietnam, the Philippines and other developing countries whose nationals live abroad already use cryptocurrency to send
remittancesat home to avoid high transaction fees.
Cryptocurrencies are not yet a popular method of payment. In a year or two, this may be the standard method of sending money overseas, potentially replacing the likes of
Capgemini’s World of Payments 2021 report estimates that 45% of customers will use cryptocurrency payments, especially with more and more people looking to send money overseas by 2023.
Cryptocurrency payments are becoming an increasingly popular alternative payment option among many businesses, although current adoption is nascent.
Capgemini World of Payments 2021 Report
Companies like Ripple and its XRP protocol are already being touted as the next phase of transformation in the global money transfer services market. “Platforms like Ripple have the potential to reduce payment times (from days to seconds) and save money,” noted global financial services giant Credit Suisse.
Evidence of this has already been seen during the pandemic. According to the Asian Development Bank (ADB), using services like Ripple, Mobile Money, and bKash has resulted in faster settlement, greater operational efficiency, and more competitive exchange rates during the COVID pandemic. 19.
El Salvador bets on adopting Bitcoin to solve its money transfer problems
The benefits of using cryptocurrencies like Bitcoin to send remittances is one of the main reasons the President of El Salvador, Nayib Bukele, has been a propagator. The island nation received nearly $ 6 million in remittances in 2020, which represented a quarter of its gross domestic product (GDP).
With that kind of volume, Bukele estimates that money service providers like Western Union and MoneyGram stand to lose $ 400 million a year in commissions due to the country’s Bitcoin law, which recognizes cryptocurrency as legal tender.
And, El Salvador is just one of many countries around the world facing extraordinarily high fees for a population where every penny counts. Nigeria, Vietnam, and the Philippines are other developing countries whose nationals living abroad use cryptocurrency to send funds home to avoid high transaction fees.
Why are cryptocurrencies becoming popular for global payments?
The popularity of cryptocurrencies in the global payments space is being driven by high transaction fees, which are expected to increase over time, and the lack of standardization of global payments, according to Capgemini.
There is also a significant gap between customer expectations and the priorities of banks and payment companies when it comes to cheaper and faster cross-border payments. “Uncertainties and delivery gaps fuel the urgency for transformation,” the report said.
In El Salvador, for example, the problem is not only paying high fees, it is also safety. Jamie Garcia, a Salvadoran who sends money from Canada, told CNBC that global payment offices are targeted by gangs. They know why people go out there and wait outside to steal them after they get the money.
According to ADB, blockchain-enabled money transfer services are also helping to resolve identity issues, especially between Malaysia and Pakistan.
However, that doesn’t mean the cryptocurrency market is ripe for its awakening. Price volatility always indicates a lack of maturity, as we saw during the roller coaster of September. A study published in Empirical Economics in January 2021 estimates that Bitcoin is ten times more volatile than fiat currencies.
For the everyday user, the fact that Visa and Mastercard are now on the bandwagon helps bring authenticity to the crypto-payments ecosystem.
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