Global remittance has become cheaper and faster in recent years, thanks to increasing innovation and competition. Blockchain technology can further improve the efficiency of global remittance—as it already has—by replacing the clumsy bank settlement system with a payment network enabled by public ledger. Its security features might also help save costs associated with fraud prevention. Introducing bitcoin into the current system, on the other hand, incurs additional costs and time, due to the additional exchange steps and high volatility associated with the virtual currency.

1. Blockchain and Bitcoin in Global Remittance:
Disruptor or Facilitator?

2. Executive Summary
• Global remittance is becoming cheaper and faster, although the rate is still high
• There is no major price difference between startup and incumbent MTOs in general
• Blockchain can drive down cost further by lowering bank fees through public ledger,
and fraud prevention fees through its anti-fraud feature
• Blockchain will facilitate the incumbents rather than become a disrupter
• Bitcoin is less likely to provide cost savings due to double exchange issue and higher
spread contributed to higher currency volatility

3. Why Important?
$650 billion / year
$450 billion to developing countries
Average $200 - $300 / transaction
30% - 50% of household income
8% transaction fees
G-20 5*5 objective: reduce cost to 3%by 2020 ($20 billion)

4. Current System
$650 billion
MTOs Banks
53%24%
Bank account
Transaction
Cash Account
or Cash

5. Industrial Trend
2. Lower Fees and Duration1. Offline-Online shift 3. Increasing Regulation
• Anti-money laundry,
anti-terrorist activity,
customer protection
• 2001: US Patriot Act
• 2008: “violent acts or
acts danger to human
life”
1-2% annually

6. Transaction Fees % and Duration
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
100
130
160
190
220
250
280
310
340
370
400
430
460
490
520
550
580
610
640
670
700
730
760
790
820
850
880
910
940
970
1000
Average Transaction Fees % ($100-1,000)
MTOs Banks
0
50
100
150
200
250
MTOs Banks
Duration Range (hrs)

7. Fee Structure Comparison
Banks MTOs
• fixed amount
• Outgoing fees + incoming fees + FX spread
• Increase with the amount, varies with destination
• Transaction fee + FX spread
Duration Comparison
Banks MTOs
• Messaging system: SWIFT
• Settlement system: ACH, correspondent banks
• Local Money Agents
+

8. Why Banks Charge High Rate?
Global Remittances is too small1 2 Compliance cost is too high
• 2001: US Patriot Act
• 2008: “violent acts or acts danger to human life”
Why Bank Account Transfer is Slow?

9. MTOs Landscape
Big 3
Upcoming
Startup
500,000 agents, 200+ countries 350,000 agents, 200+ countries 290,000 agents, 150+ countries

10. Incumbent vs Upcoming
Incumbent
• Online + offline
• Cash + bank account
• Direct relationship with banks
• Possess license worldwide
• Transaction fee + FX spread
Upcoming
• Online only
• Account only
• Third party payment network provider
• Acquire license in multiple regions
• Transaction fee + FX spread
Who’s cheaper?
No Difference!!

11. MTO cost structure comparison
Agent
commissions
50%
Bank fees
25%
SG&A
25%
Cost Structure of Western Union
Cost of
Revenue
34%
SG&A
66%
Cost Structure of XOOM
Within SG&A, High cost related to compliance, license, Fraud Prevention

12. Blockchain can save cost in…
Blockchain Can Save….
Commission
bank fees public ledger
lisence
fraud anti-fraud
cyber security
compliance

13. Self vs third party payment network
PAYMENT NETWORK
Western Union direct
MoneyGram direct
Ria direct
Transfast direct
XOOM Earthport
Transferwise Currency Cloud
Worldremit Earthport
Azimo Earthport
Viamericas Earthport
based on Blockchain technology
Blockchain
EarthPort
XOOM WorldRemit Azimo
Apps
Infrastructure
Technology

14. Bitcoin is unlikely to save cost and time…
1. Double exchange issue
Before:
After:
$￥
$￥
2. High spread due to higher volatility

15. Conclusion
• Global remittance is becoming cheaper and faster, although the rate remains high
• There is no major price difference between startup and incumbent MTOs in genral
• Blockchain can drive down cost further by lowering bank fees through public ledger,
and fraud prevention fees through its anti-fraud feature
• Blockchain will facilitate the incumbents rather than become a disrupter
• Bitcoin is less likely to provide cost savings due to double exchange issue and higher
spread contributed to higher currency volatility