As the new Bitcoin age gets established, Western Union and the bulk of money service companies operating in El Salvador may lose their grip on the country.
According to CNBC, there is enthusiasm among El Salvadorans in the diaspora about the anticipated drop in remittance costs passed on to customers by businesses like Western Union.
With over $6 billion in remittances expected in 2020, remittances are a critical source of income for El Salvador’s economy. This amount amounted to around 23% of the country’s total gross domestic output. In addition, fees paid to businesses like Western Union accounted for a significant portion of the remittance proceeds. Therefore, most El Salvadorians are now enthusiastic about the Bitcoin option, aside from the 12.5 percent transaction charge and the inconvenient nature of utilizing standard payment systems.
“Remittances are one area where the status quo in our legacy financial system is terrible, with extraordinarily high fees levelled at populations that can ill afford them,” said Matt Hougan, Chief Investment Officer of Bitwise Asset Management. “It’s a worn-out Twitter saying, but bitcoin really does fix this.”
According to President Nayib Bukele, money service firms produce up to $400 million in income through remittance payments. However, this income stream will very certainly be stopped in favor of the end-users.
The government has taken several steps to ensure that its Bitcoin ambitions are well-received by the general public. In addition to placing roughly 200 ATMs in key locations throughout the nation, the Chivo wallet, which has no transaction fees, has been released for the general public to use. As a result, the transaction flow will be as easy as receiving Bitcoin through the Chivo wallet and withdrawing US Dollars at the local Bitcoin ATM.
While the government has a responsibility to alleviate all worries and promote its proposed app to the public, giving, among other things, the assurance of data security, the government must quell all fears and sell its proposed app to the public.