Cryptocurrency Works To Improve Overseas Filipino Workers (OFW) Remittances
Overseas Filipino Workers (OFW), like may other overseas workers usually send money to their families and friends using the available international money transfer companies. Western Union, a cross-border payment service charges about $1.25 USD for remittances of up to $500 USD. For remittances up to $1000 USD, senders pay a $1.65 USD fee. It is important to know that these fees are not fixed. They are dependent on the existing exchange rate. If the exchange rates are not favorable, then the sender has to pay an extra amount to cover the difference.
In addition to paying hefty fees to send money, the services usually take several days and some weeks to reach the recipient. With all such shortcomings, it is only logical for the world to adopt the use of cryptocurrency.
Bank-To-Bank Transfers Charge Similar Fees For OFW
Turning to bank-to-bank transfers provides no relief for these workers. Banks charge just as much as the money transfer companies. OFW who use banks are forced to stick with one rule. The process is the same as that of wire transfers that are a bit faster but still go through various stop overs before reaching their intended destinations. These charges might seem trivial to rich businessmen and individuals, but they sure mean a lot to that poor rural farmer who wants to send his son studying in the city some money.
Paradigm Shift Towards Digital Currency Adoption
Considering such shortcomings in the money transfer industry, digital currency might just be the solution for OFW and the rural farmer. About 86% of citizens in the Philippines, just like the farmer have no bank accounts. Such people if taught about cryptocurrencies can use the same to send money to their families and friends since cryptos relay on the blockchain technology.
Since digital currencies transactions are paperless, they in most cases attract minimal to zero fees. In addition to not paying transfer fees, individuals will be able to send money to others thousands of miles away instantly. The extra money received can be used to cater for other needs. The fact that the money can be sent instantly is a reprieve that it can meet urgent needs. Now, OFW can send the cash to a kababayan who will then deliver the money to their families.
Impact Of The Remittances
Even though the money remittance charges appear to be small, they create a big difference when accumulate them at the national level, not only in the Philippines, but also in other countries. In January, Philippines Central Bank Governor, Nestor Espenilla Jr., said that OFW sent a staggering $2.379 billion through the banks. This amount was 9.7% increase as compared to January remittance of 2017 in the year under review. These remittances contribute immensely to the country’s economy.
OFWs at the moment contribute the largest amount of foreign exchange income to the country’s national economy. Looking at personal remittance, the income rose by 10.8% in January, raising the total amount to a whooping $2.655 billion. These remittances are really useful to this country’s economy since they help Philippines protect itself from international market shocks.
While cryptocurrency may have some advantages of the money transfer services, they face the challenge of liquidity. Merchants in the Philippines have not yet adopted the use of digital currencies. However, PundiX, a company based in Indonesia is working towards changing this situation. The company has already introduced Ethereum, Bitcoin and NPXS currencies to encourage Filipinos to start using virtual money.