Remittances and retail: Cryptocurrencies boost local economy

MANILA, Philippines — Our financial landscape is changing. Take the case of international money transfers, which overseas Filipino workers (OFWs) use to send money to loved ones back home. Western Union charges $1.25 for money orders amounting up to $500. This means $1.65 for money orders up to $1,000.

Since transfer fees depend on foreign exchange rates, the transfer fee can change at any time. So the OFW must be prepared to fork out extra money to cover them. His or her intended recipient must wait one or two days to get the money.

The same applies to bank-to-bank money transfers, which OFWs also use to send money to their family.  Like wire transfers, they’re a safe way of transferring money across long distances. But it has to go through several stops that take extra time and effort to reach its final destination.

These transactions also charge service fees that may mean nothing to big businessmen, but could mean the world to a rural farmer who wants to send money to a child studying in the city.

This is where cryptocurrency can help. Farmers and others who don’t have a bank account — and this applies to 86 percent of Filipino households — can send money to loved ones using cryptocurrency, which relies on the blockchain. Since transactions are paperless and digital, the person is spared from paying service fees that lower the amount of money his loved ones receive.

His son or daughter can get the money he sent from miles away at once, and pay that extra fee for basic needs or an unexpected expense that requires immediate attention.

OFWs who want to save on service charges can send money to loved ones without waiting for a kababayan to go home and hand it to the family. 

These savings make a huge difference at the national level. Central Bank Governor Nestor Espenilla Jr. said last January that OFWs remitted $2.379 billion in cash through banks. The figures show a 9.7 percent year-on-year growth since January 2017. Personal remittances from OFWs also rose by 10.8 percent year on year in January, and totaled $2.655 billion.

This means any amount an OFW saves is not only money earned for his loved ones; it’s money earned for the Philippine economy, which gets its biggest source of foreign exchange income from OFWs.

It is this income from foreign exchange through a steady dollar supply that protects the economy from external market forces that could rock the country’s financial stability.

The current challenge of cryptocurrency is availability. Most digital currencies have yet to find their way to places where many Filipinos love to go, like malls, restaurants, fast-food chains, movie houses, parks and others. People have no place to spend, acquire, or transact with cryptocurrency.

A company named Pundi X, based out of Indonesia, is changing this. It has created blockchain-based, point-of-sale systems that can accept cryptocurrencies like Bitcoin, Ethereum and NPXS, either through fiat money, a mobile wallet, or the Pundi X PASS card. This technology is already in use today: Pundi X just rolled out the Pundi X POS at FAMA Group restaurants in Hong Kong.

Local brick-and-mortar businesses need to embrace this technology, even if it may be initially difficult to do so. Businesses that do so will enjoy many benefits, just like the FAMA Group did in Hong Kong with its Pundi X POS deployment.

The two partners received favorable press. The buzz surrounding this rollout also translated to business: those who had cryptocurrencies wanted to try buying food in-store with them, one of their first opportunities to do so. More consumers will also want to give Pundi X POS a spin, adding further new business for retailers.