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Ripple has highlighted the poor state of the remittance market in the Asia-Pacific region. The company has announced that it will spread there in 2020 beginning with Thailand.
Ripple has indicated a serious interest in planting itself in the financial and remittance market of the Asia-Pacific (APAC) region. The giant blockchain company believes that the region is still a largely untapped mine and has its eyes firmly placed on this region for the year 2020.
Ripple Has 2020 Plans for Asia-Pacific
In an official Ripple publication on Thursday, the company breaks down the Asia-Pacific region, underscoring how much of a gold mine it is. Citing an article by the World Bank, Ripple says that there was a 12% jump in the APAC’s remittance market, in 2018 alone. It also says that the region pulls in annual remittance transactions worth about $2 billion. With numbers like this, the remittance market in the region should be running a lot more seamlessly. However, Ripple says that isn’t the case. Let’s look at the reason.
Expensive Market in the Asia-Pacific
The major issue here is how expensive these transactions still cost. Ripple says that in the region, sending $200 could attract over $20 in fees.
Generally, the state of the remittance market anywhere in the world is usually measured by considering transaction figures and charges as well. World Bank says that 2019’s third quarter saw transactions of about $200 incurring fees higher than $10.
There are also remittance channels that are cheaper than others. The expensive costs rise because remittance companies have to maintain several pre-funded accounts. These accounts have to stay that way in different regions, in anticipation of cross-border transactions. Maintaining these accounts usually involve middle-men, which in turn shoots costs higher.
Apart from the high cost, there’s also the factor of timing. Traditional cross-border transactions could take days to settle, making it not just more expensive but ineffective in an emergency.
“Not only is cost a limiting factor, but when banks are closed, payments can take an additional two days to send. It is not surprising that stakeholders are looking for a less expensive and more efficient option to complete their transactions.”
Regardless, There’s Still High Demand
In 2018, remittance in countries like Thailand and the Philippines climbed to $529 billion, a new record. It is also estimated that 2019 saw an increase of $21 billion, hitting $550 billion, and “becoming their largest source of external financing.”
The market in the Philippines is a prime example of this. Because the country has more than 10 million nationals employed in the diaspora, the remittance market is huge as these people send money back home.
Can Ripple Save the Day?
It’s very easy to see how blockchain could significantly solve remittance problems in the Asia-Pacific region. Firstly, blockchain solutions are a lot more cost-effective than traditional methods. This helps people lose less when they need to send money to their loved ones.
Also, the timing factor becomes irrelevant. Blockchain transactions are settled with unmatched speed, sometimes within a few seconds. Reliability and accessibility are also strong enough factors as pretty much anyone with access to the internet can enjoy the offerings blockchain brings.
This is what Ripple hopes to bring to the table, pumping the company’s relevance while solving remittance problems. The company has already made a play in the Thai market in partnership with Bitkub, a local crypto exchange.