How Blockchain and Digital Tokens Can Disrupt Money Transfer Business

In Q2 2017, the global average for remittance prices in the world was 7.32 percent. In Q1 this figure was 7.45 percent. This is according to the World Bank’s Remittance Prices Worldwide report.

Ironically, banks which have a wide network in the form of SWIFT remain the most expensive way of sending money around the world, with the cost averaging 10.99 percent.

Surely there has to be a better way for both senders and receivers of money?

Considering that a lot of beneficiaries of these remittances are family members in poor countries, the high percentage fee charged by money remittance companies is a big issue.

An Initial Coin Offering (ICO) from Transmission, a system of money transfer which promises ‘revolutionary changes to the traditional principles of existing currencies transfer and conversions’ is all set to raise money from the public. 

Transmission ICO begins end of August

Transmission will hold their crowdsale from Aug. 30, 2017 to Sept. 8, 2017. The token on sale is called TMN, and 270 mln of these are up for sale. The hard cap has been set at 125,000 ETH.

There is a bonus ‘all time’ discount available for buyers who conduct transactions of more than 100 ETH, which has been pegged at 15 percent, for buyers who make transactions greater than 300 ETH, a discount of 20 percent will be given.

Overall bonuses are linked directly with the volume of tokens purchased.

Apart from the fact that investors would be aiding in the development of a system that promises to overhaul the worldwide remittance system, investors stand to profit by coming on early as well.What’s in it for the investors?

We talked with Mike Gorden, CEO of Transmission who remarks:

“The terms proposed in the framework of the ICO are maximally convenient and profitable for investors: it is expressed in the essence of our token, the mechanism for its provision and integration into the service.”

He adds. “Rapid development of the volume of transactions of the system and the number of its customers directly increases the incomes of the holders of the tokens and its capitalization because it is provided by the amount of commissions received for the services of the system, in addition, the tokens themselves will act as fuel for our ecosystem and as a means of payment (with a built-in mechanism for incrementing costs from transactions) increases the liquidity of the token as a separate asset.”

Is Transmission really different?

There are already money transmitters in existence such as Western Union and  Moneygram. In addition, banks utilise the SWIFT network to send remittances globally. There are also services like Cashaa and Abra which use Blockchain and/or Cryptocurrencies to send money.

So what sets Transmission apart and why should investors line up for the ICO? The answer lies in the really low commissions that Transmission is proposing to charge in the future.

CEO Mike Gorden explains what sets Transmission apart from the others, “The concept of business of all currently existing traditional operators of the global currency transfer market does not allow them to offer their customers the lowest possible commission while providing them with the largest territorial coverage.

For example, global money transfer systems (MoneyGram | WU), due to a significant system of coverage of the territory and the need to maintain offices in many parts of the world, have to bear additional transaction costs, and the branches of banks that carry out transfers pay the costs of currency market sub-allocations for currency conversion and specialized operational offices.

Current studies of the World Bank show that this leads to the average cost of transfer for private clients being about 5.5 percent of the payment amount.”

Discussing the benefits that Blockchain has to offer, he adds:

“The connection of a system based on a Blockchain and aimed at excluding real physical movement of currencies between regions of the world will allow us to achieve exceptionally favorable expenses for transactions, speed and maximum reliability of the system operation.”

However, there are differences with existing Blockchain-based money transfer services as well. Mike tells us that existing Blockchain services are not focussed on the solution of the problem of transfers of private individuals, and providing them with a simple way of investing in buying and selling cryptocurrencies.

He says, “The use of third-party payment services in the output to the fiat offered by crypto-exchanges usually costs the client at least 1.5-2 percent.

Our architecture will allow us to exclude such costly transactions for the client and offer him a quick deposit and withdrawal from cryptocurrencies with the payment of minimum commissions, only for the use of our service.”

A finger in the cryptopie gives Transmission an edge as well

While Transmission’s focus is currently on making currency transfers possible within the realms of fiat money, they are banking big on cryptocurrencies as well.

They told us that with a $3 tln per-year scale, and the present inefficiencies in the system, the market for international transfers in fiat presents the largest and most profitable segment of their business.

Mike Gorden is optimistic on the crypto side as well, as he says:

“In our opinion, the high stable growth rates of cryptocurrency circulation in the medium term (up to four to five years) will make the proceeds from the purchase of crypto-active assets for the currency and their return output comparable or even higher than traditional transfers. Our strong marketing position and significant price advantages (at least three to five times lower commission) in respect of competitors will allow us to take a place in each of these segments.”