Income from Overseas Filipino Workers continues to drive the Philippine economy. It is without question a big part of many Filipino families. This is why many blockchain startups concentrate on the remittance market, not just in the Philippines but also abroad.
Startup companies in Hong Kong and the Philippines, Bitspark, Bloom, Payphil, Coins.ph, and Rebit are focusing on remittance market and turning it into a profitable business model.
“Bitcoin is so much better as a mechanism to send money around the world, … There’s a lot less overhead that you need to do.” – Mr. George Harrap, Chief Executive, Bitspark
These startups disrupt the conventional remittance business with the blockchain. They estimate the amount of money a business requires in a day, buy bitcoin in the same amount, and sell it to fiat money of the receiving country. They also don’t keep cryptocurrency for longer periods because they sell it right away. This allows their customers to have faster and even cheaper transactions.
Through the blockchain, users can claim 25% – 75% off transaction fees.
Blockchain Based Remittance Problem
Competition is stiff for small remittance companies. This is a space dominated by Western Union and Moneygram. Since the present supply of bitcoin is only worth $160 billion, cryptocurrency companies may not be able to handle large-scale remittances.
Another problem these startups face is legality. In 2017, Rebit obtained its license to operate from the Bangko Sentral ng Pilipinas. One Singapore startup, Toast, backed away from the blockchain just to get a license from its country. At the time we publish this article, it is still using traditional remittance services but plans on using Ethereum’s smart contracts instead.