Crypto Finds Growing Acceptance in Cross-Border Remittances


This summer, UNICEF invested Ether in eight startups aiming to use cryptocurrency and blockchain technology to further its goal of increasing financial inclusion of some of the poorest people in the world.

The 1,000 ETH investment in companies from Argentina and Mexico to Nepal and Rwanda by the UNICEF CryptoFund is just one example of how widespread the use of cryptocurrency to foster financial inclusion has become, and how seriously its potential to do good is viewed by experts on the ground.

In April, cryptocurrency exchange Huobi pledged $1 million to the fund.

Remittances Lead the Way

The use of cross-border payment-focused cryptocurrencies like Stellar’s XLM, Ripple’s XRP and Celo’s CGLD to make remittances faster and more affordable is growing rapidly, according to a September study by PYMNTS and the Stellar Development Fund.

Read more: New Study: Crypto Emerging as a Favored Form for Cross-Border Remittances

Nearly one quarter of all U.S. consumers making cross-border, peer-to-peer (P2P) payments have sent funds using cryptocurrency, according to the survey of 2,079 senders, and half did so from a mobile wallet.

There’s a good reason for that. The average fee paid for international remittances is nearly $15 — and remember that remittances tend to be no more than a few hundred dollars — and the recipients waited an average of 2.4 days to receive those funds. P2P crypto payments’ cost start at a fraction of a cent and don’t up very much from there. And transfers are nearly instantaneous.

See: Crypto Users More Likely to Use Mobile Wallets in Cross-Border Remittances

“From sending money home across borders to donating to a humanitarian organization, we want to make sure that money arrives in the right hands, not in the pockets of a middleman,” Celo Founder Rene Reinsberg said last year, as Celo announced its mobile crypto payment-focused Alliance for Prosperity, which includes more than 100 crypto companies.

Also see: Financial Inclusion And Crypto Will Drive Technology In A Digital-First World

Which is why remittances are such a prominent use of crypto. They are also a big industry, with U.S. consumers sending $76 billion overseas annually. The pandemic has caused that number to rise, with 60% of senders increasing their remittance payments.

Download the study: The Digital Currency Shift: The Cross-Border Remittances Report

Embracing Crypto

Stellar made a big splash in October when it announced a partnership with international payments firm MoneyGram, a major player in remittances, to send Circle’s USDC stablecoin for cross-border payments.

“Thanks to the reach of MoneyGram’s services and the speed and low cost of transactions on Stellar, a new segment of cash users will be able to convert their cash into and out of USDC, giving them access to fast and affordable digital asset services that may have previously been out of reach,” Stellar CEO Denelle Dixon said at the time. “We’re pleased to team up with MoneyGram to drive toward our mission of creating more equitable financial access.”

Of course, it’s worth noting that using crypto for cross-border payments doesn’t just benefit remittance users. Sending a payment of just a few thousand dollars internationally can cost well over $100. With the gig economy exploding, plenty of middle-class users exist.

But remittances as part of financial inclusion remains a central theme.

From the start, Facebook’s Libra/Diem stablecoin project pitched itself as a way to make remittances more affordable.

David Marcus, who spearheaded the project (and announced his departure from the social media giant this week) made that point in October when describing a pilot of its Novi digital wallet.

“Remittances are a critical way to achieve financial inclusion,” he tweeted. “Today, we’re rolling out a small pilot of the @Novi digital wallet app in two countries — the US and Guatemala. People can send and receive money instantly, securely, and with no fees.”