EU Science Hub

How Blockchain-Based Technology Is Disrupting Migrants' Remittances: A Preliminary Assessment

Abstract: 

Migrants' remittances represent one of the most important financial flows for developing countries: they contribute to improving the living conditions of families who live in poverty, supporting the development of the most backward economies, and have an immediate impact on families. Remittances are recognized by the UN Global Compact for Migration as an important source of private capital that cannot be equated with any other international financial flow. The cost of sending money abroad is still high, and the fees charged by the various money transfer agencies are particularly expensive and these costs are passed on to the already fragile migrant population. Thanks to the speed of innovation and subsequently declined cost of hardware, a vast number of developing countries are seeing an increase in smartphone ownership. This, connected with poor banking infrastructure and concern about national currency, has fuelled the exploitation of blockchain-backed digital payments. Considering the recent increased volume of online cross-border credit transfers, corporate payments and interbank transfers, blockchain-based technology promises to revolutionize the payments industry, speeding up processes and reducing transaction costs. This report aims at offering a first integrated approach to understanding the potential opportunities, risks and challenges arising from the rapid development of blockchain based technologies in the international remittance industry.