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Crypto could help save people in the US billions of dollars a year in remittance fees

Tl:dr: Americans spend over $12 billion a year in fees just to send money to friends and family abroad. These remittances are a vital lifeline for underbanked communities, enabling those who need it most to buy essential household goods, invest in healthcare and fund education. Yet the process for international transfers is shockingly slow and expensive. Crypto international money transfers are significantly faster and over 96% cheaper, substantially relieving the burden placed on communities who wish to provide support for their families and friends abroad.

By Coinbase


, April 3, 2023

, 4 min. read time

Coinbase Blog

At Coinbase, we’re working hard to help update the financial system by building trusted products that expand the utility and adoption of crypto because we believe crypto and blockchain technology have the ability to increase economic freedom and opportunity around the world. Coinbase chose to become a public company in the US because we believe the US would best be served by embracing this fundamental innovation, but we’re also focused on international markets, many of which are moving forward with strategies to become “crypto hubs.” We would like to see the US take a similar approach, but a regulation by enforcement approach in the US is instead leading to a disappointing trend for crypto development in the US. Today, we want to talk about how crypto can help ease the pain for Americans who provide vital support for their families and friends all over the world.

While society is more connected than ever, the global financial system remains disconnected, creating an obstacle for the 1 billion people who rely on remittances.The value of remittances, which are funds that workers in one country send to family and friends in another country, is not universally appreciated or understood. While the dollar value of global remittances stands at $781 billion, they provide what the IMF calls “value added money”. They enable growth, provide additional income and act as a form of social insurance. They help underbanked communities buy essential household goods, invest in healthcare and fund education– all in a manner which is stable and countercyclical. And Americans see the importance. The U.S accounts for about 25%, an estimated $200 billion in remittances.* 

Given their magnitude and role, it is crucial to ensure that the remittance process is as efficient, fast, and accessible as possible. But unfortunately, the legacy process of sending money abroad is complex and costly. 

When it comes to sending remittances, the greater the friction, the greater the pain, for both the sender and the recipient. And as the number one sender of remittances globally, Americans are feeling that pain. Pain in the transfer time and pain in their wallets with disproportionate fees. Whether consumers use banks, with fees averaging 10.8%, or money transfer operators, with fees averaging 6.2%, or the post offices, charging 5.5%; the impact is immense. The US average fee rate of 6.18%, means Americans' average yearly spend is likely close to $12 billion** on remittance fees. 

You shouldn’t have to spend money to send money. 

Cryptocurrencies like Bitcoin or Ethereum can greatly cut the cost of sending money internationally by about 96.7% vs. the current system. Sending Bitcoin to another wallet costs an average of $1.50 per transaction, and Ethereum costs an average of $0.75 per transaction. These numbers speak for themselves. The burden of fees can be removed: 

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It is not just the dollar cost. The time cost is just as immense and inconvenient with the average remittance taking 1 to 10 days. Cryptocurrencies are also faster; the average wait time for crypto transfers is 10 minutes. This is because the traditional financial system, which international wire transfers depend on, requires several intermediaries and only operates during “traditional” banking hours. With Crypto there is no delay. No set times. No “traditional” barriers. And it’s open and accessible 24/7, 365. No one turns over the closed sign on blockchain at the end of each day. 

Crypto’s utility is not lost on Americans, who are already using crypto to send money back home to loved ones. 1 in 5 American adults own crypto, and in states like Ohio, Pennsylvania, and Nevada, more than 40% of voters who own crypto said they do so specifically because it lets them send money across national borders. These people have very real stories about how this faster, more efficient, and cheaper system has made an impact in their lives. 

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Loved ones are all over the world and they’re receiving money from all over America, with Latin America and Asia being the major recipients of American remittances. Americans sent about $67 billion to Asiaand $52 billion to Mexico in 2022. Americans were responsible for 94.9% of all remittances sent to Mexico, and the numbers are particularly strong for California (about $18 billion) and Texas (about $8 billion), but also interesting for Florida ($1.7 billion), Ohio ($421 million), Pennsylvania ($404 million), and Nevada ($592 million).  

At their core, remittance payments are fundamentally personal transactions. But they have global implications. Serving an important role not just in the global economy, but the US economy. America is the land of opportunity, founded by immigrants on the ideals of freedom and independence for all of its citizens. Remittances epitomize individual financial freedom and the ability for all Americans to help those they hold close regardless of where they are. We want to support hard working Americans wanting to support their families and friends abroad. To do so, we need our American regulators to see the true value of responsible crypto products and services and their ability to update an antiquated system. 

Policymakers in Washington DC and across the US are making decisions about the future of crypto -- sign up for Crypto435 and join advocates from every 435 Congressional District to make your voice heard on pro-crypto policies.

* bilateral remittances matrix, Dec 2022 version ** bilateral remittances matrix, Dec 2022 version;

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