The Hidden Cost of Moving Money Across Borders

[kingstep]

For many Africans, sending or receiving money across borders is more complicated than it looks.

Take a regular Nigerian freelancer working for a client in Europe. The work may be completed online, the communication may happen instantly, and the payment may only take a few clicks to initiate. Yet somewhere between the client sending the money and the freelancer receiving it, part of that value can disappear through fees, exchange-rate differences, intermediary banks and currency conversion.

The interesting part is that these costs are not always obvious. we are becoming increasingly connected to the global digital economy through Freelance job, remote works, small businesses and online service providers which helps us earn from customers thousands of kilometers away. But even at that, our financial systems still operate largely around national currencies and banking relationships.

We know that bitcoin offers a different model and that two people in different countries can use the same monetary network without needing to be connected through the same banking system but it still comes with its own costs and limitations. Network fees, price volatility and converting back to local currencies can still create friction.

This raises a bigger concern: If an African can sell a service to someone on another continent almost instantly, why should moving the value earned from that service remain so complicated? And perhaps more importantly: How much money is Africa quietly losing through the friction of cross-border payments?

[Nathrixxx]

This is why we have bitcoin as an alternative payment currency, adopt using it if you think you cannot continue with the inflated rate in making cross border transactions, this is at our own individual discretion to determine whether we will continue with the traditional system or embrace a decentralized system with Bitcoin, but when you don't try and alternative if you don't know what you might have been missing out, bitcoin is for everyone and if you think you are uncomfortable with the way government charge for cross border transactions, you are free to adopt for Bitcoin.

[Charles-Tim]

This is why we have bitcoin as an alternative payment currency, adopt using it if you think you cannot continue with the inflated rate in making cross border transactions, this is at our own individual discretion to determine whether we will continue with the traditional system or embrace a decentralized system with Bitcoin, but when you don't try and alternative if you don't know what you might have been missing out, bitcoin is for everyone and if you think you are uncomfortable with the way government charge for cross border transactions, you are free to adopt for Bitcoin.

The problem is that these centralized platforms are still making things be like you still have to pay the money as long as you are using their platform. Example is freelance platforms.

But the main advantage of bitcoin is that you can use it for P2P transactions, provided if you know the person already. I am still wondering why some people still prefer remittance in fiat even while sending money to relatives.

[Frankolala]

Bitcoin is here to solve this problem because you don't need to spend up to $1 to get your transaction confirmed and immediately, you send it to an exchange and convert it to Fiat. If you're talking about the volatile nature of bitcoin as a challenge then, you don't understand that it's a blessing. You can accept stablecoin like USDT/USDC if volatility is your problem.

[MisFoxie]

This raises a bigger concern: If an African can sell a service to someone on another continent almost instantly, why should moving the value earned from that service remain so complicated? And perhaps more importantly: How much money is Africa quietly losing through the friction of cross-border payments?

Actually, most of the money earned on freelancing platforms is cut by the platform, which can be 10 to 20 percent. On top of that some more is reduced due to currency rates and other reasons. If the client can be brought outside the platform and the work can be done then it can be much more profitable but this is quite a risky matter.

But the main advantage of bitcoin is that you can use it for P2P transactions, provided if you know the person already. I am still wondering why some people still prefer remittance in fiat even while sending money to relatives.

The actual reason for this is that they don't know what cryptocurrency is and they also don't know how it works let alone P2P. For them the bank is the only safe place to keep money. If they knew how safe crypto is and how fast transactions are they would never use fiat to sent remittance.

[Ronsbit]

This is one of the major setbacks Bitcoin is solving. This was initially a problem in disguise as third parties were living fat of peoples money via transfer fee and commission if you use someone's else details to receive payments. But now Bitcoin and Crypto currency made it very fast and easier for payment. Within minutes you have reviewed your payment unlike the fiat system that would take days since it is coming from as n international payment system and would have to go through processes before it drops into your personal account.
No more waiting for too long, no more excessive charges, no more passing through processes. All you have to donis just present your Bitcoin wallet for payment and within few minutes you get your money in your wallet. It is borderless, saves time, no hidden charges, not subjected to any process or protocols, void of third party interference, your privacy is guaranteed.

[promise444c5]

No matter the medium you use, there’s still going to be a fee or fees attached when you want to spend it unless you just want to hold it in Bitcoin forever which is impossible..

Although, fees may differ on both sides depending on several factors including , exchange services , region and so on.

Hence, freelancers receive payment from the service they got a gig from or unless they agree on a payment option but it  definitely has to be comfortable for the sending side.

[Donk1]

Sending Bitcoin directly through blockchain isn't always good for small freelance payments because no one knows when the price will drop which could also increase the network fees. But still,I think it would be better to make use of the Lightning Network with stablecoins like USDT so that remote workers can easily accept digital dollars instead with no worries of market volatility, and swap only the money they need for cash using P2P. That said payments should probably be made based on choice, as I'm sure most freelancers will probably still want to keep their money in Bitcoin. That's all...

[MainIbem]

This is why we have bitcoin as an alternative payment currency, adopt using it if you think you cannot continue with the inflated rate in making cross border transactions, this is at our own individual discretion to determine whether we will continue with the traditional system or embrace a decentralized system with Bitcoin, but when you don't try and alternative if you don't know what you might have been missing out, bitcoin is for everyone and if you think you are uncomfortable with the way government charge for cross border transactions, you are free to adopt for Bitcoin.

I don't really see a problem with the limitations of transfering money with Bitcoin he's talking about, Bitcoin has made it easier for people across border to transact without a third-party yet he's still seeing the tx fee that can be reduced in some particular wallet with little delays in transaction as an excuse. It's suprising cause some fintech's has made cross border transactions easier yet they don't offer self custody or as good as Bitcoin or does he expect that people should disregard Bitcoin for a fiat currency alternative or use a shitcoins for cross border transactions, i don't really understand the OP.

[WhoYouCantKill]

I don't really see a problem with the limitations of transfering money with Bitcoin he's talking about, Bitcoin has made it easier for people across border to transact without a third-party yet he's still seeing the tx fee that can be reduced in some particular wallet with little delays in transaction as an excuse. It's suprising cause some fintech's has made cross border transactions easier yet they don't offer self custody or as good as Bitcoin or does he expect that people should disregard Bitcoin for a fiat currency alternative or use a shitcoins for cross border transactions, i don't really understand the OP.

Apart from periods when there are network congestions, I go honestly do not see how anyone can complain about Bitcoin transactions fees, because the fees are so favorably reasonable, just a few sats shouldn’t be such a big deal for someone who’s trying to move money across countries, especially if the money is huge amount, not to talk about the security and privacy that Bitcoin offers to its users. And speaking of the delay, if you use a reasonable tx fee, the transaction is approved in matter of minutes, so what’s really the limitations here, cos I don’t see any.

[Churchillvv]

There is always a gap in the transactions on cross border but however this gaps are covered by this remittances but people seem not to like it, but we have bitcoin as alternative which also digital so at this point you can make a choice,.the fact that people seem to accuse this platforms is what marvels me because what do you expect to get free transaction? so who will pay the workers and maintenances,, it's from the extra value they use to pay staffs.

[Franklyn-wood]

This is why we have bitcoin as an alternative payment currency, adopt using it if you think you cannot continue with the inflated rate in making cross border transactions, this is at our own individual discretion to determine whether we will continue with the traditional system or embrace a decentralized system with Bitcoin, but when you don't try and alternative if you don't know what you might have been missing out, bitcoin is for everyone and if you think you are uncomfortable with the way government charge for cross border transactions, you are free to adopt for Bitcoin.

The rate of moving money across banks this days are becoming unbearable as the are different fees charge, which varies from tax, bankcharges and lot more fees.
The fact that a lot of people still don't believe that Bitcoin transaction is safer, cheaper and faster than our traditional banks. They even prefer the traditional banks to Bitcoin as I have seen and heard people saying they rather be over charged by the banks than to transact Bitcoin.

[Callido]

Apart from periods when there are network congestions, I go honestly do not see how anyone can complain about Bitcoin transactions fees, because the fees are so favorably reasonable, just a few sats shouldn’t be such a big deal for someone who’s trying to move money across countries, especially if the money is huge amount, not to talk about the security and privacy that Bitcoin offers to its users. And speaking of the delay, if you use a reasonable tx fee, the transaction is approved in matter of minutes, so what’s really the limitations here, cos I don’t see any.

You can send Bitcoin at a cheaper fee when there is congestion, only that the process is not widely used or liked. Through the use of a secondary layer network, Bitcoin can be sent through the Lightning Network at a cheaper fee and faster during congestion.

I don't think the OP was emphasizing on the limitations, it is far preferable to use Bitcoin for a huge sum transaction and cross border payment, than using traditional banks, which can come up with many complications in the process, Bitcoin remains a suitable option.

[Obari]

This is why we have bitcoin as an alternative payment currency, adopt using it if you think you cannot continue with the inflated rate in making cross border transactions, this is at our own individual discretion to determine whether we will continue with the traditional system or embrace a decentralized system with Bitcoin, but when you don't try and alternative if you don't know what you might have been missing out, bitcoin is for everyone and if you think you are uncomfortable with the way government charge for cross border transactions, you are free to adopt for Bitcoin.

The truth is that, the major bitcoin plays is decentralization which even in recent times it's been challenged heavily because of government intervention and highly strict regulations on exchanges and just as op already said which I believe op already understood how the system works, was seeking a more convenient way to make cross bother payment with minimal fees which I agree that bitcoin offers small fees but volatility is another problem for some others especially those who are only interested in using it as a means of receiving their payments.

Op, if you charge for your services in US dollar and simply avoiding the volatility of bitcoin, then I would advise you go for stable coin payment options but if you simply want to receive your payment in your local bank, there're services now that make it very possible without hidden charges and your receive your payment into your fiat account that's if you're comfortable with that.

[Agbamoni]

The interesting part is that these costs are not always obvious. we are becoming increasingly connected to the global digital economy through Freelance job, remote works, small businesses and online service providers which helps us earn from customers thousands of kilometers away. But even at that, our financial systems still operate largely around national currencies and banking relationships.

You said it yourself. We live in a world where we are more connected to digital systems of finance. Anyone still struggling to make cross-border payments in this era lacks information. The problem of cross-border payments is settled in Nigeria.

We know that bitcoin offers a different model and that two people in different countries can use the same monetary network without needing to be connected through the same banking system but it still comes with its own costs and limitations. Network fees, price volatility and converting back to local currencies can still create friction.

Less than $2 for Bitcoin transaction fees is not a limitation. Can't compare the price of mkaing cross broader payment through a third party or using a traditional bank. The fees are extremely high. Of course, the delay is frustrating. Bitcoin is fast, the fees are cheaper, and the transaction is more private.

[Wiwo]

Bitcoin is the best option for decentralized Cross boarder alternative means of sending money.

Cryptocurrency transactions is faster and cheaper in fees, so we already have that alternative that has changed the way we send and receive money to and from one country to another.

If you have a business and a client wants to pay you from overseas, you can introduce cryptocurrency payments to them even if they are not aware of it yet, instead of relying on traditional banks for payments.

[TokenTikas]

The problem is that these centralized platforms are still making things be like you still have to pay the money as long as you are using their platform. Example is freelance platforms.

I'm also a victim of this because I'm working on some services outside this platform on a freelance platform like Fiverr. There are quite a few clients there, but after every job deal with the client, they automatically deduct (20%) from the payment. Again, after deducting (20%) from the freelance platform, when go to the local bank to convert it to (Naira), the rate is lower there than in the local market. Even when I try to get payment from the freelance platform, I pay (20%) and even when I bring it to a local bank then get a lower rate.

That is why i'm thinking about how to get the work done directly without paying these percentages and i'm talking to an old client of mine, working locally and taking direct usdt payments, which is saving me a bit.