Overseas remittances are vital for many people to maintain a decent standard of living. Having a member of a family from a low or middle-income country living in a high-income nation and being able to send money back home through means of secure international exchange can make a huge difference to the lives of people back home.
As this is such a significant economic and personal financial activity, it is important to acknowledge and examine the role that XRP is increasingly playing in helping people make remittance payments.
The Global Scale Of Remittances
There are many places around the world where this happens on a large scale. Some of that is in Western countries, where migrants go to seek their fortune, but there are also opportunities elsewhere, such as in the Middle East. Indeed, in countries like Qatar, Kuwait, the UAE and Bahrain,
Moreover, the amount of remittances is rising. Data published by the World Economic Forum (WEF) early last year showed that the level of remittances had been rising sharply since the pandemic, which by curbing immigration had inevitably depressed the levels of remittances.
The WEF also noted that India, which has the largest diaspora as well as the biggest resident population, receives the most in remittances, accounting for around US$100 million of the US$794 million remitted in 2022. Mexico was second on $60 million, which is no surprise as America’s southern neighbour has the second largest overseas population.
It was also noted by the WEF that because remittances are not necessarily beneficial to economic growth, over-reliance on them can be a problem. But that is for governments to solve, not the workers sending the money.
Having secured employment in other countries, those keen to make remittances back home must find the best way to do so. Their family and perhaps their whole village are relying on them to make sure the money is transferred safely, so the system needs to be swift, reliable and traceable.
Why XRP Makes A Difference
This is where it can be very beneficial to pay with XRP. As Netcoins notes, the system tackles three major issues that some people face with remittances head-on: transparency, speed and transaction costs.
It discussed the role XRP played in the financial platform Ripple, a specialised financial transaction and currency exchange network. But what is true for Ripple will also be so for any platform using XRP, such as XRPaynet.
The first element of the system that aids those making remittances and the recipients alike is the use of Blockchain. This means there are no intermediaries involved, so everything is faster and there are fewer fees involved. That means less money goes to the middle man and more to needy families.
A further benefit of XRP is that it can perform a seamless but brilliant service: It converts the fiat currency from the country the remittance is being sent from into XRP form, then converts it again into the local currency of wherever it is being sent.
The use of Blockchain technology also helps because its secure encryption technology makes the transaction very safe and the decentralisation of the system means that it operates outside the traditional systems of exchange between countries, which are often cumbersome and outdated, slow and subject to bureaucracy and high fees.
Getting Your Money Out Of The Slow Lane
To give an analogy, if travelling between two countries were like transferring money, the standard method would involve multiple flights on slow planes, repeated lengthy check-ins and long queues and lots of extra taxes adding to your ticket cost, while XRP would be like a rapid check-in, no hidden extras and a swift, direct flight to your destination.
For those who regularly make remittances overseas, the discovery of a system like XRP must be a joyful revelation. Gone are the long waits, the high fees, the insecurity of not knowing how long it will take money to get where it is needed, how much will be swallowed up in fees and even whether it will complete its passage securely.
Because XRP and Blockchain are tied in with cryptocurrency, it gives crypto an edge that promises to act as a major incentive for growth. Just as those who transfer money between countries while staying in one place want to do so with minimal charges and maximum speed and security, those trading or traveling will want to enjoy its benefits as well.
Indeed, the very capacity to leverage the liquidity of XRP can be used to transform crypto into fiat currency just as much as it can smooth the passage of remittances. In an increasingly global world, XRP is already the technology of now, and, increasingly, the future.