The Dollar Channel: How P2P is shaping foreign remittance

Peer-to-peer remittance is relatively new compared to other forms of international money transfer. P2P platforms match buyers and sellers of different currencies or let's remitters send money directly to beneficiaries. Unlike wire transfers where banks often charge excessively high exchange rates margins, usually 5% per transaction, P2P services usually charge a commission of 0.5 to 1.5%. P2P transfers are also faster. Users don't have to wait for 5 working days for transaction to go through. For cryptocurrency transactions, P2P offers users the benefit of privacy or anonymity. As a result of its cost and time saving advantages, money transfer providers worldwide are increasingly adding P2P options to their cross-border payment offerings. And with P2P crypto remittance becoming more popular, we can expect to see a dwindle in bank and card money transfers and dominance of P2P remittance in the coming years. In the first quarter of 2021, Nigeria traded just over $99 million in peer-to-peer transactions with leading crypto exchange, Binance, with a significant chunk of the reported volume. In the same time frame, Kenya and Ghana also had high transaction volumes. More so, stringent policies by central financial governing bodies are catalysing the growth of these P2P channels in African countries. The economies of developing countries lacking a clear structure for their exchange markets will likely see increased use of P2P infrastructures — citizens will opt to hedge weakening native fiat currencies with dollar backed stable digital assets, putting further stress on the weakening currencies. It is, however, left to the economic leaders of such countries to think on the best possible ways to create a sustainable environment for innovation to thrive in such a way it won't be detrimental to the economy.