By
Steve Muchoki
April 19th, 2024
Coinbase reported that crypto assets like BTC and ETH could help Americans cut the cost of sending money internally, which contributes to the high remittance fees.
American crypto company Coinbase (NASDAQ: COIN) explained in a recent report how crypto could help Americans save millions in remittance fees. According to the crypto company, Americans who rely on remittance fees face obstacles due to the disconnected global financial system. It also talks about how there is no universal appreciation for the value of remittances, which are the funds people send to their families and friends in other countries. Coinbase noted the level of friction in sending remittances affects both the sender and the recipient. Meanwhile, Americans top the list of people sending remittances globally. Therefore, they experience the worst pain due to friction. As they deal with unnecessary fees, they also face delays with the transfer time.
US residents pay an average of 10.8% to banks, 6.2% fees to money transfer operators, and 5.5% to post offices. The average fee rate in the country is 6.18%. This brings the average yearly expenses on remittance fees for Americans to nearly $12 billion. Coinbase says:
“You shouldn’t have to spend money to send money.”
Crypto Could Help Americans Save Billions in Remittance Fees
Hence, this is where crypto comes to rescue Americans from the choking remittances. Coinbase reported that crypto assets like BTC and ETH could help Americans cut the cost of sending money internally, which contributes to the high remittance fees. The crypto company said using crypto could save much money and reduce costs by 96.7% compared to the current system. While it costs an average of $1.50 per transaction to send Bitcoin to another wallet, sending Ethereum to other wallets costs an average of $0.75. Apart from lesser fees, there is also time cost and convenience as remittances take between one to 10 days. Meanwhile, Americans can save time and experience swift transactions by using crypto which an average wait time is around 10 minutes.
“This is because the traditional financial system, which internationally wire transfers depend on, requires several intermediaries and only operates during “traditional” banking hours. With crypto there is no delay. No set times. No “traditional” barriers. And it’s open and accessible 24/7, 365. No one turns over the closed sign on blockchain at the end of the day.”
Notably, these global remittances, which are valued at $781 billion, act as a form of social insurance. In addition, the fund is a means of additional income, and it enables growth. The US accounts for about 25%, an estimated $200 billion in remittances.
In addition, Coinbase referred to how these remittance fees are a major lifeline for underbanked communities. The remittances help in buying essential household goods and investing in healthcare. The funds also go into education.
“Yet the process for international transfers is shockingly slow and expensive. Crypto international money transfers are significantly faster and over 96% cheaper, substantially relieving the burden placed on communities who wish to provide support for their families and friends abroad,” the report states.