Quick Criticism Against Bitcoin Remittance Companies
One of the widely known means of financial transaction messaging called Swift has been criticized for failing to meet the needs of financial markets around the world. Some believe that it has proven to be inefficient in settling cross-border payments because it cannot manage real-time settlement of any transaction amount and is not transparent on payment status and settlement risk.
Innovation in global payments: a new initiative
In response to such criticism, Swift launched Global Payments Innovation (‘GPI’), which has the ability to make funds available the same day for B2B transfers that are in the same time zone. It also offers secure remittance information, end-to-end payment tracking, and greater transparency. The first phase of the project went live in January this year and is currently used by twelve banks, including ING, ‘Danske’ Bank, ‘Citi’ and Bank of China. It is currently focusing on B2B payments. Swift has again committed to expanding its cross-border payment system.
The effort to improve the global messaging service may be too little or too late in terms of resolving settlement, payment and payment settlement blockages around the world, especially for customers in the non-bank sector.
‘Bitcoin’ remittance companies
New and old ‘bitcoin’ senders are already working to resolve these issues. They use different ‘blockchains’ to transfer money around the world. Align Commerce is one of the ‘bitcoin’ remittance companies made famous by $20.25 million in funding. ‘Marwan Forzley’, CEO of Align Commerce, sees distributed ledgers and ‘blockchain’ as a next generation opportunity.
Cross-border payments in the global financial chain
These payments hovered around $26 trillion in 2014, representing around 33% of global GDP. Due to inconsistent and non-standardized infrastructure, money will remain trapped in the current system. To send payments across the border, a customer must find a transmitter to manage the money transfer. The transmitter will be able to transfer the payment due to its contacts with financial institutions both in the country of origin and in the country of destination. In addition, each institution has its own intermediary, which adds more complexity to the process. Each bank, involved in managing the transfer, charges its own service fee and a process can take up to 7 days to complete.
The corporate sector worldwide was estimated to be worth $15.7 trillion in 2014. They can negotiate fees between 1 and 2 percent of the payment amount. Whereas, small and medium enterprises; and person-to-person transactions can be charged up to 15%. The hidden cost of these transactions makes it more difficult for customers who cannot afford it.
If a customer is from an ‘unbanked’ or undeserved part of the world, they may not be able to find routes to simplify cross-border payments, for example by taking the services of a transnational bank for transferring payments using their infrastructure. .
Efforts made by ‘Bitcoin’ remittance companies
Although Swift is committed to providing transparency in cross-border payments through ‘GPI’, it has failed to provide relief when it comes to clients who are unable to negotiate fees. On the other hand, ‘bitcoin’ remittance companies have made efforts to solve this problem on a small scale. These companies allow customers to execute borderless transactions at a low and well-controlled cost.
One of the biggest ‘bitcoin’ remittance companies called ‘Bitspark’ is based in Hong Kong. The company believes it has the best long-term prospects despite the lack of traction. The CEO of the company, ‘George Harrap’, said:
“The vast majority of remittances in the world are not made through banks, but through cash transfer shops. This will not affect the way they manage their business or transactions. The cost will remain the same as remittance companies’ batch payments anyway, so potentially reductions in electronic fees don’t affect companies that transfer $10 million per transfer and withdraw this balance for small remittances.“
The problem persists
Despite Swift’s intention to improve payment transaction recording for its member institutions around the world, it is possible that GPI-inspired innovations could appear in other blockchain-enabled applications. For example, the ‘HyperLedger’ Project (a project Swift is a member of) could develop the foundation for cross-border frameworks in the future.
‘ZipZap’ CEO ‘Alan Safahi’ managed to raise $1.1 million in 2014 to expand his cash service to ‘bitcoin’. According to,
“‘ZipZap’ uses a combination of traditional bank payment gateways (Swift) and ‘blockchain’ technologies to find the least expensive and most efficient transfer option. Swift ‘GPI’ is primarily for B2B payments, so it won’t affect the current ‘ZipZap’ trade flow.“
It is mentioned in Ripple that the release of ‘GPI’ was more of a step to stay relevant than a step towards modernization.