Banking activities like saving, depositing money, making online purchases, making transfers, and other banking transactions might seem like simple everyday things to you and me. However, there are still a large number of people in this world who do not have easy access to banks. As a result, as many as two billion people may not even have bank accounts.
The ability to process payments across borders through electronic means has been invaluable for sending money between countries, online purchases and making other kinds of payments as easy as possible. However, while technological advancements has allowed fees for international transactions to go lower and lower, these fees are still considered relatively high and eat away into the amount being transacted.
For some consumers, whether they are the payer or the receiver, these transaction fees can be quite a lot. Even in the lower range, like Paypal’s 2.9%, it can still hurt, especially for small business owners.
With blockchain technology, transaction fees are expected to be even lower due to cutting out of middlemen like banks and credit card services. Thus, increasing the margins for business owners and receipt amounts for foreign workers sending money back home. Blockchain technology also means that digital currency stored online can be transferred to a bank or ATM instantly without having to wait for a minimum transaction amount or subject to a minimum number of business days.
How Blockchain Can Help The Migrant Worker
One type of consumer affected by transaction fees when remitting money across border is the migrant or foreign workers. With costs going at around 7%, this is quite a big cut compared to what money they’re sending back to their home countries. As migrant workers usually only make minimum wage, this loss from the total amount could affect them and their family back home, who are usually poor.
With blockchain, workers can send digital currency from their end straight to their relatives back home, using just their smartphone. This bypasses remittance agency fees, bank fees and intermediary fees. This allows remittance of currency with very minimal loss to both sides, and further helps alleviate poverty as concerned parties are now able to spend and save more.
The Benefit Of Blockchain To Small Business Owners
When a retailer offers to accept credit or debit card transactions, they are often charged a fee for each transaction. For bigger companies with big profit margins, these fees are often offset by the revenue. However, for small businesses, this eats into their profit, and might even spell a loss for them. With lower transaction fees, small businesses can earn more.
Another benefit to small business owners – and even big businesses, in fact, is that blockchain technology decreases instances of fraud. If a purchase is made with a stolen credit card, merchants are often not paid by the banks even though the items have been dispatched. As blockchain is resistant to modification of data as well as being instantaneous, data cannot be manipulated for the most part, while merchants get their money straight away – it’s as good as cash.
With lower transaction fees and faster finance remittance, blockchain is set to disrupt the traditional monetary transactions. It’s also more accessible to those who are considered the unbanked and underbanked with the use of digital wallets and digital currency, such as using FINX to transfer money to a friend or to a merchant, straight from their savings account. Meanwhile, it’s also safer than bringing wads of cash around, and eliminates the need to prepare small change. Blockchain transactions is definitely the way of the future that will make transactions easier while also helping to boost the economy.