Can Cryptocurrencies or DLT Rescue the Risks of Overseas Remittances Loopholes?

We interviewed couple of beneficiaries of overseas remittances, like, exporters, consultants working for abroad companies and some non-residents about such transaction’s TAT (Turn Around Time), processing charges, and the necessary prerequisites. Out of our inferences, various loopholes were observed, but predominantly, we tend to think of global currency as one common medium of exchange under the circumstances of mounting interests of global trade.

First and foremost, inward remittances (IR) have been considerably costly (charges including SWIFT processing charges, charges for forex differential risks, tax etc).

Secondly, trade finance transaction (including LCs (letter of credit, open account & TTs) and other foreign exchange transactions are also extremely costly and transaction speed is considerably slow that involves a series of intermediaries.

Thirdly, in some cases, due to their country’s central banking stringent regulations, the beneficiary has to continuously furnish the prerequisite details, such as the purpose of payment and the relationship between the remitter and the beneficiary even though the nature of the transaction is regular business related. This would be for security reasons or to prevent money laundering etc. But the cause of concern is that shouldn't hamper the authentic and lawful business practice.   

Well, we came across international fund transfers cost exorbitantly, the clients and other Non-Residents of India may had to incur a mammoth 15k crores of INR (or $2.3 billion) in terms of fees last fiscal year for clearing overseas remittance in India, which is the world’s biggest market for inward remittance, as per the sources of Times of India.

We have noticed some of the veterans in the crypto and blockchain (digital ledger technology, DLT) space, have been striving to address these loopholes.

We reiterate the instance of Ripple with an objective of developing blockchain-driven remittance platform for the South East Asian region.

“Distributed ledger technology (DLT) will help CIMB expand its market share across ASEAN by offering more accessible and competitive services”, Ripple CEO Brad Garlinghouse mentioned.

The other instance is Euro Exim Bank’s announcement to deploy XRP-driven XRapid and xCurrent for overseas payment transactions. Euro Exim Bank has collaborated with Ripple, to improvise better connectivity with banks, payment providers and digital asset exchanges via RippleNet so as to ease clients’ seamless experience to operate with money globally. 

XRP is the native cryptographic asset of the XRP ledger. In a broader sense of the cryptocurrency industry, it is also referred to as Ripple as they are the parent company.

While the RippleNet is designed to improvise the global network of value overseas payment transfer systems. 

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