Remittances

Remittances

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Context

The World Bank estimates that global remittance volume is around $500 Billion each year. For many, receiving transfers from friends and relatives abroad is a much needed lifeline. However, middlemen and financial intermediaries introduce frictions which means that money is often diverted from its intended recipient.

Globally, the average fees for remittances is about 7%, but fees could reach 15% or higher depending on the amount transferred and the remittance corridor. High fees disproportionately shouldered by the most vulnerable and low income communities.

Challenges

High fees. Financial intermediaries charge large fees for cross border transfers and payments to individuals, diverting much needed aid from the end recipient.

Long transaction times. Intermediaries and middlemen often introduce long lead times for transactions. In our research, we've encountered users who said they've sometimes had to wait for days or even weeks to receive remittances from abroad.

Capital controls. It can be extremely cumbersome to send money to countries with strict capital controls, like Venezuela. Informal networks and money remitters will develop to fill the need, but these often introduce risk for fraud and theft.

Why Celo

Celo offers a low cost and user friendly solution to send remittances to any phone number in the world.

Benefits

  • Low-cost global transactions. Transactions to any phone number in the world for a fraction of a penny.
  • Stable value currencies: Transact in Celo Dollar (cUSD) or Celo Euro (cEuro) with all the benefits of a decentralized digital currency without the volatility.
  • On-off Ramps: There are a host of cash-in and cash-out options around the world. The list of supported merchants and partners continues to grow and includes merchants, cryptocurrency exchanges, mobile money operators and more.
  • Immediate Syncing Even on Slow Connections: Extremely fast, secure synchronization between mobile devices and the Celo network means that even Valora users with high latency, low bandwidth, or high-cost data tariffs can use Celo. Celo removes the need to check every header before a received header can be trusted. Performance is further improved with BLS signature aggregation and succinct zero-knowledge proofs, via zk-SNARKs.
  • On-off Ramps: There are a host of cash-in and cash-out options around the world. The list of supported merchants and partners continues to grow and includes merchants, cryptocurrency exchanges, mobile money operators and more.
  • Accounts Linked to Phone Numbers: Celo maintains a secure decentralized mapping of phone numbers that allow wallet users to send and receive payments with their existing contacts and with confidence that the payment will reach the intended recipient. This abstracts away part of the complexity of using blockchain technology – users no longer need to know a recipient’s public address to transfer funds.

Case Study

The Pesabase team offers a simple and low cost way for international senders to remit funds to Kenya and Sudan on Celo.