Migrant workers’ remittances constitute a significant portion of international capital flows, especially in labor-exporting countries. Remittance by definition is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland.
Typically there can be two types of remittances — Outward remittance and Inward remittance.
Outward Remittance applies to the sending nation, where the paid worker is based. The sender approaches a bank or remote trade organization to transfer funds overseas to the designated country. A large portion of the accepting banks has built up settlement associations with money houses and banks in different nations to improve the stream of settlements into the nation.
Inward Remittance applies to the nation that receives the money. The bank gets the cash sent from the sending individual in the nation in which the cash is.
HC Remit is a Blockchain-powered cross-border remittance platform provided by HashCash Consultants. HC Remit can be used to transact and record asset and currency movement across borders. It obviates traditional systems such as SWIFT and payment gateways with blockchain-enabled platforms for cost-effective, instantaneous, and auditable remittance transactions.
Banks, Currency Exchanges, and Financial Institutions may use HC Remit.
HC Remit Features:
HC Remit, a HasCash Product, compiles a rich set of features. These include the following:
- Live-tracking of transactions with all parties using the Remittance Dashboard
- Monitor your funds and NOSTRO accounts through real-time tracking
- Cross currency Remittance
- New banks can be easily onboarded to the network
HC Remit Benefits:
HC Remit with its strong set of features offers the following benefits:
- Eliminate higher transaction cost arising from using SWIFT networks and Payment Gateways
- Onboard new banks to your cross border network faster as opposed to the traditional remittance system
- Automate critical business processes using Smart Contracts
- Ad-hoc funding to reduce liquidity costs for Pre-funded accounts
- Lower maintenance and recurring costs for your remittance system
- Safe, secure, and authentic transaction handling
How HC Remit Works
The high-level architecture shows how the sender’s fund is routed from the source (Customer’s account in a local bank) to the destination (Recipient account in an overseas bank)
Figure 1: High-Level Architecture
The client app signals the Business Adaptor which allows it to fetch the requested amount of funds and returns to the app. Further, the business adaptor forwards the data in two ways:
One, in which it sends the data (details regarding the account debited, and amount) to the Blockchain Core. The Blockchain core, next broadcasts the same data in its network, where it is permanently recorded.
Second, in which the Business adaptor passes the data to the Federation and Compliance Server. The Federation server authenticates the user credentials of the Web service and sends security tokens to the clients. The Compliance server, on the other hand, conducts checks to ensure the action conforms to the regulations or policies set by the governance of the land.
Once the funds pass the checks at the Federation and compliance server, they are sent to the beneficiary’s account or the overseas account.
Figure 2: Segregation of the layers
Figure 2 demonstrates the information exchanges through the various layers. The Web App requests the webserver which in turn queries the Core Banking Systems of the source bank and returns the requested information to the Web App. Next, the Web App sends the information to the Database layer, similarly via the Web Server. In this layer, the information is written to the database and is also passed on to the next layer in which the information is parsed by HC’s Compliance Server and Federation Server. Following this, the information is transmitted to the Compliance Server and Federation Server of the beneficiary’s bank.
This is how HC Remit transfers funds without any aid/expense from intermediaries.
Customer Flow: Remittance to Beneficiary Account
The aforementioned plays on the user’s screen in a rather simple way. To enumerate the steps that the user goes through in their mobile device are as follows:
- The customer registers with a bank account and is assigned a user-friendly Login Id.
- Next, (s)he is led into the retail remittance page and is shown a form.
- Instead of the usual fields such as Bank Account No., Beneficiary Name, Routing Number, SWIFT Code, IFSC Code, etc, (s)he is only asked for the recipient’s ID. This is already provided to him during the sign-up process.
- The beneficiary address that is submitted can also be verified before the actual transaction is submitted for remittance. This helps avoid reworking on the customer and bank’s part if the transaction details are incorrect. The customer is shown the beneficiary details before submission and the transaction only goes through once the details are verified.
- The customer enters the currency to be remitted and the amount to be remitted. (S)He is shown the current exchange rate from the bank’s APIs or Global Distributed Exchange’s order book if so desired.
- The customer is shown the amount that will be credited to the beneficiary bank account and the fees that he needs to pay for the remittance. (S)He needs to acknowledge the details to proceed with the remittance.
- Once the customer confirms the details, a compliance check for the Sender and Receiver of the transaction is carried out. The sender’s compliance details such as KYC/AML/CTF are verified by the sender’s compliance server. The remittance initiating party then shares the details of the transaction with the receiving party. The receiving party’s compliance server then does a complete compliance check for the beneficiary’s details. If all the compliance requisites are met, both parties agree to initiate the transaction
- Once compliance checks are completed the transaction is submitted to the blockchain.
- The receiving party receives the transaction on the blockchain. It verifies with the compliance server that the incoming transaction has been authorized and all compliance requirements have been met. Once these details are verified, the receiving end debits the office account and credits the beneficiary’s account.
Here settlement happens in real-time and messaging on the SWIFT system is replaced by API services and blockchain transactions.
Actual Settlement between the transacting parties takesHigh-Level place through established conventional means. However, the sending party holds pre-funded Nostro accounts either through direct or correspondent relationships with the receiving party. Alternatively, transacting parties can net off transactions and then settle either at the end of the day or any other designated time period. Transaction to domestic banks not on the network can be initiated through the domestic payment network in Beneficiary Country (Money Transfer).