PayPal, the international payment platform for individuals and businesses, has long been a target for cryptocurrency remittance platforms, and the payment giant has responded by expanding the Xoom service it launched last year to take in 130 countries worldwide.
Calling the platform “fast, convenient and secure way to support loved ones back home”, Xoom now covers over 66% of the world’s countries and allows individuals to send up to $10,000 “at affordable costs” using just a smartphone, but is it as good a deal as it seems?
High Fees Remain
A press release announcing the expansion described it as “another example of PayPal fulfilling its mission to make the movement and management of money more convenient, accessible, secure and affordable.” If you ask the CEOs of many crypto payment platforms they will likely share the same aim, and will also point to the fees involved as an example of where cryptocurrencies still have the ability to trump options like Xoom, and looking at Xoom’s fees might suggest they’re right.
Using the example of someone sending $500 to India through Xoom, the lowest fee is $2.99, and that’s only if the person collects the cash at the other end which incurs its own costs. If you want to pay it straight into their bank account it will cost $4.99, and that’s if you pay through your bank account – if you choose to pay the fees through debit/credit card this rises to a whopping $15.49. Throw in the line “In addition to the transaction fee, Xoom also makes money when it changes your send currency into a different currency” and suddenly Xoom doesn’t seem so affordable.
Can Crypto Compete?
Now, of course, PayPal and Xoom have convenience going for them, in that users just have to download an app and they can send the money straight away, whereas using cryptocurrency still has barriers to entry. This includes the purchasing of the cryptocurrency in the first place and turning it into cash at the other end, plus there’s the matter of accountability if something goes wrong. But the benefits are clear – if the $500 was sent using XRP for example, the fee would have been less than $0.01 – so if the other elements can be overcome then cryptocurrency still has huge advantages over traditional payment methods.
If a catch-all crypto remittance platform can be established that features a number of cryptocurrencies and easy on- and off-ramps, we could see the remittance market finally be shaken up. Of course, the likes of PayPal could start implementing cryptocurrencies, but that seems a little way off yet.