Crypto Emerging as a Favored Form for Cross-Border Remittances

According to PYMNTS research, nearly 60% of consumers who made cross-border remittances in the previous year increased such payments as a result of the pandemic. With US consumers sending approximately $76 billion in remittances to people in other countries each year, the opportunity to reduce the cost of these payments while increasing their speed is too appealing to pass up.

With more people looking to blockchain and cryptocurrencies to dramatically reduce the cost and speed of cross-border payments, PYMNTS researchers polled nearly 2,100 consumers on the topic and discovered significant interest in adopting crypto remittances.

The Digital Currency Shift: The Cross-Border Remittances Report, for example, conducted in collaboration with Stellar Development Foundation and PYMNTS, discovered that 70% of consumers pay a fee to send money overseas, "with 41 percent paying a percentage fee averaging 6.2 percent, and 28 percent paying a fixed fee averaging $14.80." The total cost to US consumers is $3.5 billion. While 30% of respondents said they do not pay a fee, they may be incurring exchange rate costs."

Those who use cryptocurrencies for remittances have had a different experience.

According to the study's findings, "23% of respondents — representing 8 million adults — who made online payments to friends or family in other countries used at least one type of cryptocurrency." In fact, 13 percent of consumers polled said cryptocurrencies were their preferred payment method for online cross-border remittances."

Crypto Holders Like It for Remittances

While PayPal, credit cards, and bank transfers are the most commonly used methods for sending remittances, cryptocurrency usage is growing due to its unique properties for cross-border transactions.

As one would expect, owning cryptocurrency increases the likelihood of using it for cross-border payments, and the growing population of crypto holders is driving the trend.

"Fifty-one percent of consumers making cross-border P2P payments currently hold cryptocurrency, compared to approximately 12 percent of the general U.S. population," according to the study. Almost half of these consumers have purchased cryptocurrency for any purpose. This is unsurprising, as consumers with a need to send funds quickly will likely favor options that allow them to transfer money instantly and fund their payments in a variety of ways convenient to them.”

Trust and Choice Influencing Cross-Border Crypto Use

The entire financial system is built on trust, and cryptocurrency is no exception. Consumers' willingness to send peer-to-peer (P2P) funds is determined by trust.

According to the study, "trust in the brand name of their PSP is important among consumers who make remittance payments using cryptocurrency." Because of the remittance service's brand name, nearly two-thirds of cryptocurrency holders have increased their trust in cross-border payments, compared to 52 percent of non-users of cryptocurrency."

However, up to 24% of consumers said they would “choose a specific provider if receiving payments in cryptocurrency were available, and 22 percent would if making payments in cryptocurrency were available. These percentages go up to 45 percent (receiving payments in cryptocurrency) and 50 percent (making payments in cryptocurrency) among those who already make cryptocurrency cross-border P2P payments.”