Will Money Remittance Become Blockchain’s First Mainstream Use Case? Alibaba’s Ant Financial Services Thinks So

Ant Financial Services recently launched their blockchain-based cross border remittance service.

While blockchain technology has a seemingly limitless number of use cases, from streamlining supply chains to simplifying the internet of things, relatively few of these case are anywhere near the point of becoming mainstream. That may be about to change with news that international workers can now remit money quicker and more cheaply thanks to blockchain technology. As reported by 8BTC and CCN, Ant Financial Services, an Alibaba Group affiliate, successfully completed the first trial of their new blockchain-based money remittance service. The transaction involved sending funds from AlipayHK in Hong Kong to the Philippines in partnership with GCash and took less than three seconds to complete. Could cheaper cross border money remittance become blockchain technology’s first mainstream use case?

Remittances are steadily climbing
According to the World Bank, remittances – the act of international workers transferring money back to their home countries – have been steadily rising for several years. India tops the list of remittance receiving countries, followed by China with the Philippines in third place. According to an interview with the South China Morning Post Alibaba’s CEO Jack Ma has long expressed an interest in helping people cut the costs of remittance via AliPay. Ant Financial’s successful trial could help fulfill Ma’s stated promise to cut remittance costs for millions of Alipay users via blockchain technology.

Blockchain-based remittances aim to cut costs for users
The move to a blockchain based service was realized when Alibaba offshoot Ant Financial entered into a joint venture with CK Hutchinson Holdings to create AlipayHK, a Hong Kong based enterprise. They partnered with Filipino-based Globe Telecom Inc.’s GCash to provide a cheaper remittance service between HK and the Philippines. The owner of GCash, Mynt, is a fintech startup partnership between Ant Financial, Globe Telecom and the Ayala Corporation. It aims to provide faster and cheaper international remittances and is aiming to become the cheapest remittance service.

Could cheap remittances become blockchain’s first mainstream use case?
According to Mynt president and CEO Anthony Thomas, the aim of using blockchain technology to speed up cross border remittances is to cut the cost for users. If this service takes off, it will introduce potentially millions of international workers to one of the key benefits of blockchain technology: transparency.

Unlike services such as MoneyGram and Western Union, GCash will enable both the sender and recipient to “track their money via the remittance application,” according to Thomas. While users will not be interacting directly with the blockchain, they will benefit from having a greater understanding of the process and lower remittance costs.

Why are blockchain-based remittance fees so low?
Although GCash claims to offer the cheapest remittance service for workers in Japan wishing to remit money to the Philippines, Ant Financial’s new service might not be quite as cheap as it seems, according to GMA. The new HK-Philippines service will be fee-free during the first three months, after which time fees will be introduced. This is clearly creating an artificial distortion of the true cost of blockchain-based remittances. If we look at GCash’s Japanese homepage, we see that while they quote the ‘lowest remittance fees’ for sending Japanese Yen to the Philippines, starting at 440JPY, this fee only applies when sending sums under 10,000JPY and rises with higher amounts. It is also clear that the stated exchanges rates aren’t as competitive as the live mid-market rates quoted by XE.com. A true picture of blockchain-based remittances will only emerge once the three month fee-free grace period ends.

Ultimately, the success of Ant Financial’s new HK-Philippines blockchain-based remittance service will hinge on keeping transaction fees low. While users will be drawn to any service that offers greater transparency, cost is king and it will be interesting to see whether Ant Financial can maintain customer interest when fees kick in. If low cost remittances are realized, we could see this area become blockchain’s first mainstream use case, to the benefit of millions of international workers.

Jonathan Deller
Jonathan Deller
Jonathan Deller is a writer-at-large for Block Telegraph based in the United Kingdom. A teacher with a background in English and Education, when he is not teaching, he is busy writing about cryptocurrency, Bitcoin, Blockchain and markets.

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