What is Remittance?
For example:
Maria lives in the United States, while her mom Paulina lives in the Philippines. Maria wants to send her mom $20, that is called Remittance.
Remittances are money sent to support a family member in another place or country and they are a very big deal. The World Banks remittances are over 600 billion US dollars every year.
Unfortunately for Maria, sending a remittance is pretty expensive. Her bank in the US has no connection to her mom’s bank in the Philippines, so she has to use a money transfer service. Which means paying a lot of fees. One popular American service charges a 3% conversion fee and the transfer takes 3-4 days.
The same service also offers to do the transfer faster, but for an additional fee of $9.99. If Maria used this service to send $20, it would mean half of the amount would be spent on the fees. That’s a huge percentage. And Maria and Paulina are not alone. The average fee globally for remittances is 7.1% of the transaction. And there are millions of people who pay these fees everyday.
What if Maria used Stellar?
Stellar is a decentralized platform that unites banks, payment systems and people, so they can easily move money around the world.
If Maria use Stellar to send $20 to her mom, the Stellar network would convert her US dollars to Philippine pesos in less than five seconds. So Paulina would receive $20 worth of her local currency – not $20 minus fee.
Stellar makes this possible by connecting financial institutions to the Stellar network which has a built-in order book that exchanges assets. So Maria could send dollars – or any other currency to her mom, and it’s converted automatically to Philippine pesos. That’s the vision of Stellar.
Resources:
https://www.coinbase.com/earn/stellar
Related Article:
https://read.cash/@Jane/lets-go-crypto-stellar-unites-the-worlds-financial-infrastructure-9d0d870a
I hope you learn something new today about crypto.
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