Fiat to Crypto Onramp: The Future of Cross-Border Payments with Crypto Remittance

In the evolving world of finance, the global remittance market appears to be on the edge of a significant shift, driven primarily by the increasing adoption of crypto-based transactions. Crypto remittances, a relatively new development in the financial landscape, refer to the use of cryptocurrencies to transfer money across borders. These transactions are faster, cheaper, and more accessible compared to traditional financial services, hence, the potential to completely transform the current remittance landscape.

As humans, it is our way to resist change. Hence, for new technology to gain mass adoption, it almost always needs to be significantly better than existing solutions. Crypto remittance seems to tick all the boxes needed for a fundamental change.

SWIFT out, crypto remittance services in

Remittances are funds sent by migrant workers to their home countries. Traditionally, these are sent through intermediaries like banks or money transfer operators (MTOs), such as Western Union. These channels are fine, except they charge a high fee, take a lot of time to process and are not accessible in remote locations.

Cryptocurrencies offer an enticing alternative because of their decentralized and digital nature. Crypto remittances involve sending money as digital assets, which upon receiving the user then converts back to local fiat currency. Stablecoins, which are tied to stable assets like the U.S. dollar, are the most commonly used cryptocurrencies for remittance.

Crypto offramp/onramp comes to cross-border payments

As with every new technology, several factors need to align to make it remarkably better than existing solutions for it to work out, and it almost always comes down to cost, speed, and accessibility.

• Cost: Traditional remittance methods charge a percentage fee based on the transferred amount. In contrast, cryptocurrency transactions typically have flat, and significantly lower fees. To understand why cost is so important, consider a migrant worker from Nigeria working in France. What might seem like the cost of an average meal to a French person - say 15 EUR - converts to approximately ~12,000 Nigerian Naira, which has much more value than the cost of a meal.
• Speed: Traditional money transfers are notorious for their inefficiencies and can take several days to process a transaction. Cryptocurrency transactions, however, are nearly instantaneous, geographical locations are not relevant here. I have yet to meet someone who prefers a slower transaction over a faster one, and that says a lot about why this might work out. A family of a worker in a remote Bangladeshi village living month to month would always prefer to receive their money on the same day than the 7th of the month.
• Accessibility: A technology needs to be easily accessible if it is to be widely adopted by the mass. Without the need for established banking infrastructure, crypto remittances are accessible even in the most remote, under-banked areas. This increased accessibility means potentially integrating more people into the financial system.

Despite its advantages, for crypto remittance to succeed, it must also be easy for companies to build products around it. These companies need to navigate regulations and create streamlined fiat-to-crypto processes for a frictionless user experience.

Crypto onramp/offramp providers

Crypto and banking as service providers are an essential part of the puzzle in this respect. They merge crypto and traditional banking services together, providing a streamlined solution for processes like fiat-to-crypto on/off ramp, while handling regulations and licenses.

So, on one hand, we have better products being continually developed for cross-border transactions and remittances via crypto. On the other hand, end users greatly benefit from using crypto for remittance over traditional methods. For a significant shift in user behavior, it can’t get better than this.

Like every new technology, there may be obstacles and resistance. But ultimately, it's about the end users - the individuals sending money across borders. If crypto remittances can offer a cheaper, quicker, and more accessible method of sending money, then its value becomes visible. In the face of a superior solution, reluctance to change only holds out for so long.