Cryptocurrencies will reduce global fees for cross-border remittances by more than 96% and speed up time by 99%.
Coinbase analysts point out that using cryptocurrencies allows users to reduce transaction fees for international money transfers by over 96%. They also cite IMF data stating that about 1 billion people depend on cross-border remittances, and the dollar value of global remittances stands at $781 billion.
U.S. citizens spend $12 billion annually on fees for money transfers abroad. The country accounts for about 25% of all cross-border remittances; accordingly, people around the world spend up to $48 billion on commissions, the average of which turns out to be about 6.14%. This correlates with the World Bank report, showing that remittance fees averaged 6.3%.
For comparison, the average transaction fee on the Bitcoin network is $1.50 regardless of the transfer amount, while it’s $0.75 on Ethereum. Coinbase analysts estimate that sending funds in BTC and ETH is 96.7% cheaper than traditional transfer methods. Moreover, the average transaction time for traditional money transfers can take from 1 to 10 days, whereas similar crypto transactions usually require about ten minutes.
Thus, global crypto adoption could change the financial landscape of many developing countries. For example, in the U.S., fees for international transfers range from 5.5% to 10.8%, depending on the terms offered by a particular financial institution. Meanwhile, according to the Wilson Center, U.S. senders were responsible for 94.9% of all remittances sent to Mexico in 2021. They totaled $51.6 billion, with fees ranging from $2.84 billion to $5.46 billion, respectively.
Nearly 13% of American adults owned various forms of digital assets at the end of 2022. Another study found that about 20% of the world’s population holds some form of crypto.
