Blog article
See all stories ยป

SWIFT Alternatives and Crypto Remittance : Sending Money with Crypto

In recent years, blockchain and cryptocurrency have disrupted traditional financial systems and are providing a viable alternative to cross-border fund transfer systems such as SWIFT. Cryptocurrency remittance is becoming increasingly popular due to its cost-effectiveness, efficiency, and ease of use. In this article, we will explore the challenges associated with SWIFT payments for remittance in emerging markets, the disadvantages of SWIFT payment, and how crypto remittance is replacing SWIFT payment.

Challenges with SWIFT Payment for Remittance in Emerging Markets

SWIFT payments have proven to be inadequate in meeting the needs of users in emerging markets. The financial system's severe challenges for international money transfers start with the significant exchange fee markup of approximately 10%, which places an additional financial burden on the sender. In addition to high exchange fees, users from emerging countries face high transfer fees and an extended settlement time of up to five days. This delay can cause severe difficulties for recipients who may need the funds urgently, as well as significant frustration for senders who expect prompt and efficient service.

Disadvantages of SWIFT Payment

SWIFT payments have some notable disadvantages, despite being the industry standard for international payments. One of the most significant issues with SWIFT is the time it takes to process payments. Typically, a transfer goes through several banks within the SWIFT network, and the process is rather complex. As a result, it can take several days for a payment to be completed, which can be frustrating for users who expect faster, more efficient services. Intermediary banks may add their fees to the cost of the transfer, making the overall cost of using the SWIFT network higher than expected. This can cause a significant financial burden on users who need to make international payments frequently, especially those from emerging markets where remittance fees are already high. Furthermore, SWIFT has faced criticism for its lack of transparency and security. In the past, there have been instances of fraud and cyberattacks that have compromised the SWIFT network's integrity.

Crypto Remittance: Sending Money with Crypto

Sending money abroad using cryptocurrencies has become increasingly popular due to its cost-effectiveness and efficiency. Users can use crypto wallets, neobanks, or crypto-friendly fintechs to deposit EUR using their vIBANs and convert the EUR into any cryptocurrencies. In Europe, many companies can build the whole flow of funds on top of a crypto-banking as a service platform, making the process seamless and user-friendly. Once the user finalizes the conversion, they can send the cryptocurrencies using on-chain transactions to anyone in the world, and the recipient will receive the funds instantly. This process is much faster than traditional methods like SWIFT, which can take several days to complete. Additionally, using cryptocurrencies to send money abroad is much cheaper than SWIFT, with a range of cross-border remittance fees between 0.25% - 2%, depending on the service provider used such as Solid and Striga. This can result in significant cost savings for users who need to make frequent international payments.

Crypto Remittance is Replacing SWIFT Payments

In conclusion, the use of cryptocurrencies for remittance is becoming a viable alternative to traditional methods like SWIFT. It offers a cost-effective, efficient, and user-friendly option for sending money internationally, particularly for users in emerging markets who face high fees and lengthy processing times with traditional systems. While SWIFT has been the go-to payment system for international transfers, its disadvantages cannot be ignored. The need for a more efficient, cost-effective, and secure payment system has become increasingly important, and cryptocurrencies are providing a solution that meets these needs. With its cost-effectiveness, efficiency, and ease of use, cryptocurrency remittance is replacing SWIFT payment and becoming the preferred option for

 

19100

Comments: (0)

Mousser Rahmouni

Mousser Rahmouni

Head of Strategic Partnerships

Striga

Member since

30 Mar 2023

Location

Tallinn

Blog posts

11

This post is from a series of posts in the group:

Blockchain in Banking and Financial Services

This group is to share any information related to enterprise wide Blockchain technology adaption in different Banking Financial Services sub-domains.


See all

Now hiring