A recent blog post from cryptocurrency exchange Coinbase indicates the vast majority of US remittance fees for international transfers would not apply to similar transactions made with cryptocurrencies.
According to the exchange's research, "the average US fee rate of 6.18% means that average annual American spending is likely closer to $12 billion in remittance fees." The post goes on to state that the average transaction time for such remittances ranges from one to 10 days, while similar cryptocurrency transactions typically take around 10 minutes.
Remittance payments represent something of a 'double whammy' for international transactions as they typically require both a delivery fee and a conversion fee to switch between currencies.
Cryptocurrency transactions, however, tend to cost significantly less. By Coinbase, Bitcoin (BTC) transaction fees average about $1.50 and Ether (ETH) averages $0.75. These fees are potentially much lower than traditional remittance fees which, according to the World Bank, average 6.3%. According to Coinbase estimates, sending money via BTC and ETH is 96.7% cheaper than traditional sending methods.
While the report does not appear to have the rigor of a scientific study, it does illuminate some of the difficulties faced by the more than one billion people who rely about remittances and how the global adoption of cryptocurrencies could change the financial landscape. US senders, for example, were responsible for 94.9% of all remittances sent to Mexico in 2022, according to the Wilson Center, a DC-based research institute.
Related: 9 years after the first Bitcoin ATM, there are now 38,804 worldwide
Is My dear that approximately 6% of American adults currently hold some form of cryptocurrency with adoption rates continuing to rise since at least 2019, with the exception of two quarters of recession by the end of 2022. If these rates can rise or maintain the status quo, a trickle exodus of traditional remittances to international cryptocurrency-based transactions could eventually disrupt the way the global financial industry handles the associated fees.
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