Legal cross-border payments are mostly processed through a network of correspondent and intermediary banks or money transfer operators (MTOs). There exists no central clearing system. Also, these transactions may only take place during regular banking hours. More importantly, transactions incur processing fees from multiple intermediary banks. MTOs, like Western Union, are faster but come across as an expensive alternative, often used by the unbanked.
Blockchain technology offers a solution to all of this. The distributed ledger technology (DLT), ensures that each transaction occurring on a given network is recorded. An identical copy of each transfer is maintained on each network’s computers or “nodes”. Transactions are bunched in “blocks” and chronologically recorded in a “chain” structure. All permissioned entities on that network can review prior entries.
Blockchain assures irrevocable, real-time, cross-border fund transfer. With a low banking penetration, high demand for financial services, very strong mobile penetration, and emerging financial infrastructure, Vietnam makes for a strong ground for remittances using blockchain in Vietnam.
Global blockchain development company HashCash Consultants is glad to announce the deployment of its remittance product – HC Remit in a soon-to-commence project by a Vietnamese Payment Service Provider. The project focuses on inward-bound payments and remittances in cryptocurrency.
Vietnam ranks among the top 10 countries by volume of incoming remittances ($18.06 billion in 2021). The figure makes for 6 percent of Vietnam’s annual GDP. Vietnam exported a total of 3.6 million tons of crude oil and received payments worth $1.9 billion, in 2019.
Research reveals that the major remittance corridors are topped by the US – home to around 2.2 million immigrants. Cambodia shelters 600,000, while Japan hosts 371,000, France 350,000, Australia 300,000, Canada 250,000, Taiwan 200,000, Germany 170,000, and South Korea is home to 170,000. This set comprises the main source of remittances to Vietnam.
“Had blockchain remittance solutions been around to save the overseas Vietnamese workers 6-9% in fees, then in 2019 the net additional remittance received in Vietnam would have amounted to $1-1.5 billion based on the same amount remitted,” communicated Raj Chowdhury, HashCash Founder, and CEO, over an email.
“Seamless onramps and offramps which is crucial for mass adoption and can be afforded through private payment service solutions,” adds Chowdhury pointing to an opportunity for investors. “Ensuring a secure, instant, borderless payment.”
HashCash Consultants have claimed to have made a significant contribution to the heightened crypto activities in UAE with back-to-back projects involving the deployment of their crypto exchange and payment processor solutions. The company has recently announced its collaboration on a Metaverse development project. HashCash has also worked on building a consortium for a digital media brand.
Optimism should carry and guide such projects to completion as regulations are still underway in the jurisdiction of operation. No significant roadblocks appear for blockchain-powered remittance companies to provide a route for inward remittances. However, the legal framework is neither stable nor is complete. Existing laws do not explicitly prohibit DLT powered remittances from operating in Vietnam, as long as funds received as cryptocurrency are not spent as cryptocurrency.