According to the BBC, no place is more ripe for such a system than Africa. Citing research by Overseas Development Institute (ODI), reporters found that Western Union was charging as average fees of 12% to send $200. The ODI characterized the fees as a “super-tax” on Africans sending money home.
“Africans living abroad make huge sacrifices to support their families, yet face charges which are indefensible in an age of mobile banking and internet transfers,” said Kevin Watkins, the report’s co-author and ODI Director.
Reducing charges to a 5% global target for 2014 set by the G20 would cut fees by $1.8bn (£1.08bn), the ODI said.
The BBC report noted that two companies, Western Union and Moneygram, had an effective “duopoly” on the remittance market in Africa. The companies control roughly two-thirds of the remittance payout locations in on the continent. Moneygram executive vice president of UK and Africa Carl Scheible said that the figures were misleading, and that average fees were in the 5.1% range.
Bitcoin fees, even for huge amounts, are measured in pennies. That said, bitcoin-based remittance services face a number of significant institutional factors at the moment, from unfavorable regulation to simple cultural inertia.
But, as Barry Silbert told Business Insider> in January, the long-term odds are in bitcoin’s favor.
If you have the alternative of sending $100 to your family and paying a dollar versus $20, you’re always going to choose the cheaper option.”