Luis Buenaventura is head of product at Satoshi Citadel Industries, the parent company of Rebit.ph, a Philippine bitcoin-based remittance service.
The sister cities of Hong Kong and Macau currently house more than 200,000 migrant Filipinos between them.
The breakdown is fairly homogenous in terms of occupation: the largest group consists of 160,000 Filipinas working on Foreign Domestic Helper visas on the Hong Kong side, with a little under 17,000 on the Macau side.
Together, the two groups transferred over $380m back to their families in the Philippines in 2013, amounting to between 30% and 40% of their collective wages.
The remittances industry has become something of an obsession of mine over this last year, as we have begun the long process of thoroughly educating ourselves on the Overseas Filipino Workers (OFW) situation around the world and rolled out our bitcoin remittance service.
There’s an oft-touted statistic when discussing the ‘global remittance challenge’ that I love sharing: in 2014, an estimated $436bn will be remitted around the world by migrant workers, and $47bn of that will be spent on transaction fees.
It’s a great soundbite, because it’s so startling. $47bn! That’s five times India’s education budget, 14x South Africa’s healthcare budget, and the entire GDP of Kenya.
“Surely, there is something we can do about this,” I naively thought, at the start of this process.
It was a staggering proportion of remitted funds lost to the (arbitrary?) costs of transmission and, in my mind, that constituted the proverbial industry that was ripe for disruption. Of course, it’s never as simple as that. There is, after all, a huge difference between the possibility of disruption and the ripeness thereof.
Upon closer inspection, in fact, it appears as if the remittances industry is being quasi-disrupted on a fairly regular basis.
Inside a remittance hub
During Rebit.ph’s recent trip to Hong Kong, we spent hours talking to the patrons and vendors at the popular mall World Wide House (WWH), which on a Sunday constitutes the densest concentration of Filipinos in the country.
Each of WWH’s four floors have a dozen or so separate remittance establishments, and every one of these shops had lengthy queues extending outwards from their respective windows.
As the financial capital of Southeast Asia, Hong Kong’s remittance industry is predictably competitive. Each shop reportedly pays upwards of 55,000 HKD ($7,096) in monthly rent, so only the strongest businesses survive.
The most popular of these shops is probably the Franki Exchange Co. Even in this fiercely competitive environment, they have managed to open three branches in the same mall, practically one per floor.
A quick inspection of their rates shows why. Their pricing is cheap — almost unbelievably so — and their workflow is streamlined enough that they are processing customers at a rate of nearly one per minute. The average Filipino remitter can expect to queue up for about an hour to send money home, which is important if you only have one day a week with which to run all your errands.
- ^ Bitcoin ATMs (www.coindesk.com)
- ^ Bitspark (www.coindesk.com)
- ^ Rebit (www.coindesk.com)
- ^ Hong Kong traffic (www.shutterstock.com)
- ^ Asia (www.coindesk.com)
- ^ China (www.coindesk.com)
- ^ Hong Kong (www.coindesk.com)
- ^ Macau (www.coindesk.com)
- ^ Philippines (www.coindesk.com)
- ^ Remittance (www.coindesk.com)
- ^ Southeast Asia (www.coindesk.com)