The world is changing, and so is how we send money across borders. Two Stellar ecosystem companies, FinClusive and Anclap, are shaking up the world of remittances.
According to the World Bank, remittances to low- and middle-income countries grew an estimated 5% in 2022, reaching over $620 billion. But traditional methods of cross-border transfers can be a hassle. Hidden fees, slow processing times, and high costs make sending money overseas a headache. Globally, sending remittances costs an average of 6.3% of the amount sent. This figure is used to monitor the progress of the global effort to reduce remittance prices.
The pilot program, based on stablecoins such as Circle’s fully reserved USD Coin (USDC) and Colombian Peso-backed stablecoins, demonstrates that blockchain transactions can be significantly more affordable and compliant than traditional fiat remittances for the payments corridor between the US and Colombia. These stablecoins ensured low volatility and faster transaction times, ultimately proving to be an effective method for cost reduction and seamless integration with local financial systems. For this particular corridor, the average cost of sending remittances via traditional methods is 5.36% of the amount sent. Based on the results of this pilot, the average cost for remittances sent via blockchain, utilizing stablecoins, is roughly half that figure for this specific payment corridor and could be further reduced as transaction volumes increase. In addition, the pilot highlights the importance of interoperability, showing that blockchain-based solutions can integrate seamlessly with local banking and payments infrastructure, ensuring a convenient and user-friendly consumer experience. While these results are based on a small sample size, it measured the time and cost for real world payments between individuals.
“This pilot program is a testament to the real-world benefits of the Stellar network,” says Denelle Dixon, CEO and Executive Director of SDF. “SDF’s core focus has always been to facilitate the seamless movement of value across borders, and this pilot program confirms that the interoperability of the Stellar network can drastically enhance the speed and affordability of remittances. Anclap and FinClusive are pioneering solutions that are ahead of their time, and we must spread the word globally.”
FinClusive, a regulatory technology (regtech) company, recognizes the potential of networks like Stellar to provide faster and more cost-effective alternatives for remittances and cross-border transactions. The pilot program serves as a practical example of the benefits that the Stellar network, and blockchain more broadly, offer to individuals, businesses, and governments globally. FinClusive also recognizes that intrinsic social benefits and opportunities for mobility arise from providing increased, streamlined liquidity to family members and communities worldwide. Decentralized finance provides historically underbanked populations with faster and cheaper rails to move value across borders.
Anclap provides an interoperable fintech infrastructure that allows a transfer and conversion of fiat to stablecoins and connects blockchain-based solutions to Colombia's local banking and payments card system. By empowering Latin American currencies with the features of digital assets, local economies are enabled to have global exposure, fostering their growth and expanding the capabilities of local financial systems to serve more people and provide better services to that expanded customer base.
The integration between Anclap and FinClusive showcases the potential of Stellar to optimize cross-border value transfers, highlighting improvements in cost and speed while reinforcing the existing capabilities of the underlying network. Anclap's user-friendly and affordable Send platform, supported by FinClusive's compliance solutions, can address financial inclusion challenges by making financial services more affordable, and more accessible, for all.
Amit Sharma, CEO and Founder of FinClusive says, "This pilot program shows that DeFi offers tangible, viable alternatives to traditional finance that can solve the greatest challenges for financial inclusion in underserved communities."
Ivan Mudryj, Co-Founder of Anclap, adds, "Countries with developing economies have an incredible opportunity to grow faster by having access to a global payment network. This use case, which is only the start, enables us to demonstrate the effectiveness of stablecoins in greater detail."
It's time to say goodbye to the hassle and high costs of traditional remittances. With blockchain, sending money across borders has never been easier or more affordable.