In a bid to shed light on the evolving dynamics of remittance flows in Latin America, Mastercard has unveiled a comprehensive white paper outlining key trends and challenges shaping the region’s remittance landscape.
The report underscores the rapid growth of remittance rates in Latin America, outpacing the global average, and anticipates a transition from cash to digital options driven by increasing mobile phone and internet penetration.
Mastercard Unveils Whitepaper on Remittances
As of 2022, one in ten individuals worldwide resides in a household that receives remittances, amounting to a staggering $831 billion in total remittance flows. Notably, Latin America grapples with an average remittance cost of 5.8% of the transaction amount, slightly below the global average of 6.3%. However, costs can skyrocket to as high as 25.5% in impoverished regions, accentuating the disparity in accessibility to remittance services.
Despite the growing competition among remittance providers, informal channels continue to dominate the transmission of at least half of all remittances, as per World Bank data cited in the report.
Mastercard Talks About Facilitation of Transactions with Crypto
Highlighting the emergence of a new paradigm in global remittances, the report identifies various digital remittance options that are gaining traction in Latin America, constituting 43% of total remittances received in the region. By 2026, digital remittances are projected to reach a substantial value of $20 billion.
Notable players in the digital remittance sphere include MoneyGram and Stellar, facilitating transactions using USDC, while SBI Remit leverages Ripple’s infrastructure. Ripple, in particular, is spearheading efforts in central bank digital currency (CBDC) development, alongside other pioneering initiatives aimed at enhancing remittance efficiency.
Luther Maday, MoneyGram’s head of fintech strategy and innovation, underscores the transformative impact of new channels such as USDC in expediting global remittance flows.
Challenges in Between
Despite the burgeoning presence of crypto players like Binance and Mastercard, in collaboration with wallet provider Belo, significant hurdles persist in the crypto space. Trust issues, regulatory uncertainties, and technological adoption barriers continue to impede the progress of crypto players and traditional remittance providers alike.
Moreover, the report emphasizes the imperative of fostering comprehensive digital money ecosystems in recipient countries to fully harness the potential of digitization and reduce transaction costs.
It is important to note that Mastercard continues to embrace the digital asset sector, recently announcing its partnership with crypto payment platform MoonPay. The two will investigate how Web3 tools can enhance experiential marketing and discover fresh approaches to engage with Mastercard’s consumer audience.
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