Remittance in the Form of a Pizza?
October 6th, 2015 - Posted by Adel Shahin
When we talk about remittance nowadays, most people think about sending cash through an agency or international transfer via their banks. These types of remittances can be very costly, and ineffective in how the money is actually used. Today, we’ve started using a new taxonomy to improve the lives of others in both, emerging and developed regions; purposeful remittance.
The concept of purposeful remittance is the ability to send funds that can only be used in a specific way or at limited outlets. This is especially important to ensure donations or the money transferred is not diverted from its original destination. This concept is not new, however, the coverage and acceptance rates we have today are greater than ever.
People on websites such as Reddit’s Random Acts of Pizza don’t even realise that they are participating in purposeful remittance. A stranger chooses to buy a pizza for someone in need (or just hungry), they contact the local pizza shop directly and pay directly (with zero remittance fees) to have the pizza delivered to the stranger. Pizza stores are becoming the newest remittance agencies without their knowledge. The types of payments accepted vary from credit cards to bank deposits, but none have an added remittance fee (whereas traditional remittance agencies can charge up to 25% of the total amount for high corridor countries). This is a huge remittance opportunity.
Purposeful remittance is not limited to food outlets, it is in fact used primarily by telecommunication companies that have leveraged purposeful remittance to enable international top-up. This allows anyone to top up a mobile phone of someone they know internationally by simply by knowing their phone number. Topping up the phone of someone in need allows the person to spend the little money they have elsewhere. So instead of paying the high transfer fees, or risking cash transfers, the remitter has an alternate way to send predetermined value to their loved ones instantly.
Cryptocurrencies are also disrupting the remittance industry but from a technology perspective. Bitcoin is currently being used as a remittance channel, in many cases, without the consumers knowing. A remitter is able to send funds via a bitcoin agent paid in their local currency, then the amount is translated to the bitcoin equivalent and transferred digitally in real-time to a bitcoin agent on the other end. The receiving agent will translate the bitcoin back into the local currency and pay the receiving party the equivalent amount as cash or bank deposit. In this instance, cryptocurrency is being utilized as the remittance rail for the transfer.
The future of remittance is a very interesting field. With major developments and traction in global cryptocurrencies, connectivity, technology, and the highest level of migration/refugees we have ever seen. There will be major innovations to heavily disrupt the millennia-old industry of remittance.