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Cross-border money transfers are transactions made from different countries – or, when the registered merchant is based in a different country from the issued customer card. And because each country has its regulations, the process can be complicated.
With businesses and consumers becoming more connected than ever, a seamless international transaction has become crucial. Along with that, fintech advancements such as crypto remittance have further solidified cross-border payments, making it easier to send money abroad.
Cross border transactions challenges
Payment Processing
Cross-border transactions are time-consuming and can be disrupted, causing delays and inconvenience. The transmission of international payments is often manually intensive and can take several weeks to process.
Exchange Rates
The more entities involved in transactions, the more complicated the process, meaning the banks charge more fees. Often international remittances can cost the payee up to a 10% markup in exchange fees.
Compliance Regulations
To avoid fraud and financial crime, each bank and payment gateway has its own set of rules that can further cause delays and even lead to failed transactions. Furthermore, it may also be subject to domestic banking regulations, causing even more complications.
Crypto remittance vs SWIFT
Being the industry standard, SWIFT has been a reliable and secure network since its formation in 1973. It offers a secure, standardized environment for banks and financial institutions around the world to send and receive global transaction details.
Here’s how a typical SWIFT transfer takes place:
Step 1: The client initiates an international transaction or wire transfer through a bank, which provides an exchange rate and transaction details. The bank then withdraws the money from the sender’s account.
Step 2: The bank creates a SWIFT message containing transaction details, including the receiving bank’s code. Then it proceeds to send the SWIFT message to the receiving institution through intermediary banks.
Step 3: The receiving bank processes the message, credits the recipient, and updates the transaction in each user’s account.
The downside? SWIFT payments can be slow, taking several days compared to other cross-border transactions. However, the biggest drawback is the expensive fees, with banks incurring high charges for maintaining their network connection.
The SWIFT network charges users a transfer fee, an exchange rate, and a double currency conversion rate. Big banks and institutions charge 3-5% on the exchange rate for each transfer which varies from bank to bank and is based on the amount sent.
This puts users from emerging countries at a disadvantage due to the significant exchange fee markup of approximately 10%, placing an additional financial burden on the sender.
Not just that, SWIFT has faced criticism for its lack of transparency and security. Past instances of fraud and cyber-attacks have compromised the SWIFT network’s integrity – highlighting the need for a more secure and transparent payment system that can provide users with greater peace of mind and confidence when making international payments.
Overall, while SWIFT has been the go-to payment system for international transfers, the disadvantages are glaring. The need for a more efficient, cost-effective, and secure payment system has become increasingly important, particularly in emerging markets where users are often at a disadvantage due to high fees and lengthy processing times.
Crypto remittance: the better alternative to move money
Crypto remittance is a better, cheaper, and faster alternative to SWIFT. It removes all the friction and inconvenience to provide a seamless transaction through the simple steps:
- The sender initiates the transaction by converting their fiat currency into the desired cryptocurrency through a cryptocurrency exchange or a peer-to-peer marketplace.
- The sender then transfers the crypto assets to the recipient’s digital wallet.
- The recipient can then convert the cryptocurrency back into their local currency if they wish to do so.
Users can use crypto wallets, neobanks, or crypto-friendly fintechs to deposit EUR using their vIBANs and convert the EUR into any cryptocurrencies. In Europe, companies can build the flow of funds on top of a crypto-banking as a service platform, making the process seamless and user-friendly.
Once the user finalizes the conversion, they can send the cryptocurrencies using on-chain transactions to anyone in the world, and the recipient will receive the funds instantly.
Crypto remittance is a faster and better alternative to SWIFT, which can take up to several days to complete.
Additionally, using cryptocurrencies to send money abroad is much cheaper than SWIFT, with a range of cross-border crypto remittance fees between 0.25% – 2%, depending on the service provider used. This can result in significant cost savings for users who need to make frequent international payments.
Sending money abroad using cryptocurrencies has become a viable alternative to SWIFT. With its cost-effectiveness, efficiency, and ease of use, it offers a compelling option for users who want to make international payments.
Case in point: Striga’s cross-border payment infrastructure APIs for remittance apps
Remittance across borders can be expensive and time-consuming. Striga’s native API integration allows companies to build the flow of funds on top of their crypto-banking as a service platform, making the process seamless and user-friendly.
Once a user finalizes the conversion, they can send the cryptocurrencies using on-chain transactions to anyone in the world, and the recipient will receive the funds instantly.
Users can use crypto wallets, neobanks, or crypto-friendly fintechs to deposit EUR using their vIBANs and convert the EUR into any cryptocurrency.
Cross-border money transfer through crypto onramp-offramp
Another way Striga makes it easier for companies looking to merge a payments infrastructure solution to enhance conversions is through a seamless fiat on-ramp solution that allows their end-users to buy crypto within your application, all at competitive prices. The fully integrated fiat gateway solution allows a company’s end-users to move in the crypto world seamlessly.
Whether onramping or offramping cryptocurrencies, the streamlined approach is incredibly intuitive. Bitwala is an impressive case. As they relaunched their brand to focus on their self-custody, trading, and card issuing features amid EU crypto regulations, Striga’s compliant digital assets and banking infrastructure came to the rescue.
Being the first company to receive the VASP license in Estonia, Striga was able to build strong partnerships with issuing banks and financial institutions by implementing a single set of APIs to provide access to user onboarding, card issuing, and crypto trading and custody – all with a single contract and fully transparent product and pricing.
Users can use crypto wallets, neobanks, or crypto-friendly fintechs to deposit EUR using their vIBANs and convert the EUR into any cryptocurrency.
Simplifying fiat off-ramping with Bringin
Users often face problems when trying to off-ramp or spend their profits because most banks and fintech companies are not crypto-friendly.
Striga’s API makes cashing out from crypto into fiat easy and quick. No more proceeding through exchanges, filtering through trading pairs, and placing complex orders. And the best part: it all happens within your application.
Built on top of Striga’s Fiat off-ramp APIs, Bringin’s compliant interface simplifies offramping Bitcoin to Euros, tackling the critical challenge of banking hesitance towards Bitcoin transactions by ensuring that all fiat money is processed separately through the use of unique virtual IBAN accounts.
With dedicated IBAN accounts for each user and support for lightning and SEPA instant transfers, Bringin ensures that exchanges are instant and reliable with little to no custody exposure. For first-timers, especially, dipping their feet into the Bitcoin pool just became a whole lot easier.
As a key infrastructure of Bringin’s platform, Striga ensured regulatory compliance while maintaining security standards.
As the Markets in Crypto Assets (MiCA) legislation approaches, any application that’s not a non-custodial wallet will have to comply with massive regulations for consumer protection, safeguarding funds, audits, etc. Not only does it mean companies like Bringin will have to shell out millions of Euros in compliance, but it will also be extremely time-consuming on their part.
By leveraging Striga to do the heavy lifting of the “boring work,” Bringin could instead focus on building a host of new products and use cases for the Bitcoin community.
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