How serious a threat is Bitcoin to remittance giants like Western Union and MoneyGram?
Cryptocurrency
Asked by Question Bot10/Aug/20141 answer
1 Answer
F
Faisal Khan
Answered 10/Aug/2014
Not much for the years to come (I would wager 2-3 years safely). Whilst Bitcoin certainly has the rails to make payments better, WU/MoneyGram has the network effect which makes it very difficult to penetrate at the moment.
Bitcoin buying/selling and remitting via Bitcoins is so minuscule right now, it doesn't even show up as a blip on the US$ 500 Billion per annum money transfer market.
From a transaction volume point of view, Bitcoin is almost a zero entity.
For Bitcoin to become more mainstream in remittance and to show up as a player, it would have to make a mark, even at 0.5% - this would amount to US$ 2.5 Billion worth of remittance transactions per year. Bitcoin is nowhere close to this number.
Legal & Regulatory issues aside, which are major issues in my opinion, the issue of on-boarding/off-boarding seems to be an issue. While bitcoins may be sent across instantly the buying/selling onto Fiat and settlement across the border would still use SWIFT and this is a bottleneck.
Western Union and MoneyGram are not complacent. They have a very unique perspective and insight towards remittances (in fact, I would argue they perhaps have the best dataset on remittances than anyone else). WU/MG will implement whatever needs to be implemented to make their transactions go faster and cheaper, be it Bitcoin, Ripple, their own proprietary payment protocol, etc.
For the time being, they are very comfortable where they are and where bitcoin is at the moment.
Bitcoin buying/selling and remitting via Bitcoins is so minuscule right now, it doesn't even show up as a blip on the US$ 500 Billion per annum money transfer market.
From a transaction volume point of view, Bitcoin is almost a zero entity.
For Bitcoin to become more mainstream in remittance and to show up as a player, it would have to make a mark, even at 0.5% - this would amount to US$ 2.5 Billion worth of remittance transactions per year. Bitcoin is nowhere close to this number.
Legal & Regulatory issues aside, which are major issues in my opinion, the issue of on-boarding/off-boarding seems to be an issue. While bitcoins may be sent across instantly the buying/selling onto Fiat and settlement across the border would still use SWIFT and this is a bottleneck.
Western Union and MoneyGram are not complacent. They have a very unique perspective and insight towards remittances (in fact, I would argue they perhaps have the best dataset on remittances than anyone else). WU/MG will implement whatever needs to be implemented to make their transactions go faster and cheaper, be it Bitcoin, Ripple, their own proprietary payment protocol, etc.
For the time being, they are very comfortable where they are and where bitcoin is at the moment.