Cross-border money transfer: Banks vs Blockchain
Today, the borders between countries become increasingly transparent and common to cross. Approximately, 1.4 billion tourists travel abroad every year. Сompanies source services and various goods in other countries, where they find better prices. People, unable to find a job at home, migrate for work to other countries, where their skills are in demand.
There are no borders when it comes to communication: it does not matter where your friends or colleagues are located, a text message or a media file can reach them in a matter of seconds. Once cumbersome, time-consuming and costly process of exchanging information has become almost instant and free, except for internet connection costs.
Communication and travel made easy, money is still slow to move internationally. Though it is supposed to be the driving force behind any type of progress and facilitate things greatly, the traditional cross-border money transfer system has not changed so much as other aspects of our life did. There are many problems to the banking sector, but the major ones are three: low speed, high costs and lack of security.
We all know that international banking transfers are rather slow – sending money to a friend abroad may take up to five business days if you use the established procedure. If some complications occur, it may take even longer. This time lag is caused by the complexity of the transfer process that involves a number of trusted intermediaries.
Naturally, the more middlemen you work with, the bigger is the total cost of the service. Each partner bank has to get paid for doing its share of the work. The outcome is frustrating – the average fee charged by bank for a cross-border transfer is 7%. And it’s not the worst case scenario: for instance, a migrant worker who sends money back to his unbanked family living in rural India, will probably opt for using a payment system like Western Union or MoneyGram that might charge him even more.
Thus, when you send money abroad by a bank transfer, you pay unreasonably much for a service that may take unreasonably long to complete. It’s counterintuitive that the same bottleneck that slows down the movement of your money and causes you inconvenience, should also add extra costs. As a client, you want your payments faster, cheaper and less complicated.
Blockchain can be the answer to all these challenges, as it introduces P2P payment systems with streamlined processes.
As soon as your transaction is recorded in the distributed ledger, the receiver gets access to the funds. No significant time lags, no paperwork, no banks A, B and C passing your money to each other. Ultimate speed and simplicity, offered by blockchain financial solutions, allows businesses to be more dynamic, flexible and responsive – if you don’t have to wait for money, you are faster to make decisions and take actions. You solve problems on time and address your clients’ needs more efficiently.
Blockchain also makes money transactions cheaper than ever before. It’s natural – instead of paying fees to multiple banks, you pay a really small blockchain fee, required to process the transaction in the network. This fee depends not on the amount you send, but on the data size you transfer. This difference is essential to organizations who occasionally send big amounts of money abroad, as it implies considerable cost savings.
Another promise is increased security level. Banks are centralized systems by definition, meaning all the transaction records are kept in one place. Despite the security measures taken, this data storage can be hacked or damaged with malware, and the users’ financial information will be compromised. Blockchain, by its very nature, is extremely hard to hack – the distributed ledger records are protected by means of cryptography, each transaction being inseparably linked to all the previous ones. Thus, it’s impossible to tamper with data without getting noticed – to achieve it, you need to change all the blocks in the chain.
There are many blockchain-based financial solutions already in existence, enabling fast and secure international transactions. Potentially, they can take people and businesses to a completely new level of interaction, eliminating the need for centralized financial institutions like banks.
One of such next-gen solutions is Channels – a payment app that belongs to the Exscudo blockchain ecosystem. It makes possible to almost instantly send and receive transfers in dozens of popular currencies, both fiat and crypto. No added layers of cost, no frustrating delays – everything occurs in real-time. A transaction is processed within 3 minutes (block update time), but the process often takes no more than a few seconds.
A little more than a blink of an eye, but definitely less than a cup of coffee.
Channels, based on the in-house EON blockchain, features an unprecedented level of safety, with zero history of successful hacker attack. It also provides really attractive currency exchange rates, that cannot be compared to those normally offered by banks. These rates are sourced from the major exchanges like Bitstamp, Bitfinex and GDAX.
Sending money from one country is no longer a problem for you, especially if both parties are on Channels. Join the community and see your cross-border transfer costs reduced up to 20%.
It’s a rare case, when trying something new brings such an impressive bonus, with no stress added.