According to a recent blog post from bitcoin exchange Coinbase, most United States remittance fees for foreign transfers wouldn’t apply to comparable transactions carried out using cryptocurrencies.
The average charge rate in the US is 6.18%, which indicates that the average monthly fee expenditure for Americans is probably close to $12 billion, according to the exchange’s data. The article continues by stating that whereas similar crypto transactions typically take roughly 10 minutes, the average transaction time for such transfers ranges from one to ten days.
Remittances are a kind of “double whammy” for overseas transactions since they often involve both a sending cost and a conversion fee to convert currencies.
Transactions using cryptocurrencies, however, typically cost a lot less. Transaction costs for Bitcoin are $1.50, while those for Ether are $0.75, according to Coinbase. These charges might be far less than conventional transfer costs, which, according to the World Bank, average 6.3% on average. According to Coinbase’s calculations, transferring money using Bitcoin and ETH is 96.7% less expensive than conventional remittance options.
Despite the report’s apparent lack of scientific rigor, it does highlight some of the challenges faced by the more than 1 billion people who depend on remittances and how the growth of cryptocurrencies globally may alter the financial landscape. For instance, the Wilson Center, a research organization located in Washington, D.C., estimates that 94.9% of all remittances transferred to Mexico in 2022 were made by U.S. senders.
According to estimates, 6% of American adults presently possess cryptocurrencies, and adoption rates have been rising since at least 2019 except for a two-quarter slump around the end of 2022. If these rates can rise or stay the same, a slow shift away from conventional remittances and towards cryptocurrency-based foreign transactions may eventually cause disruptions in the way the global banking sector manages related expenses.