5 ms·

I think it's a pretty smart move, considering this company has been (dare I say) stealing about 10% off of 25% of the GDP of the whole country for years. Good f

I think it's a pretty smart move, considering this company has been (dare I say) stealing about 10% off of 25% of the GDP of the whole country for years. Good for them, I hope they succeed and become an example for a lot of others who are in the same boat.

lotsofpulp 5y ago
Why does another company not come in to steal 9% to 24% of the GDP of the whole country?
- 3434g34g34 5y ago
  Because WU has a monopoly on remittance payments in multiple countries.
  - lotsofpulp 5y ago
    Interesting. Is there any reading material available for how this monopoly is maintained? Are the country’s leaders being paid a cut for allowing WU to be the only money transmitter or something like that?
    - haskellandchill 5y ago
      People gloss over what goes into money transfer. There is substantial risk, verification of identity of recipient, etc. With Bitcoin the services are simply not offered, so it's not really comparable. You get irreversible money transfer to an bitcoin address nothing more and nothing less. Western Union's services go well beyond that.
      - lotsofpulp 5y ago
        I figured, I just thought I might ask for a source to lend credence to any conspiracy theory.
    - potiuper 5y ago
      Exclusivity agreements https://en.wikipedia.org/wiki/Western_Union#Anti-competitive_behavior https://en.wikipedia.org/wiki/Western_Union#Anti-competitive...
      - lotsofpulp 5y ago
        That makes sense. I would not have thought even a poor country’s bank would agree to that. But it does not seem to be a problem in El Salvador today. The situation is also getting better based on this report linked in Wikipedia: http://www.remesas.org/files/exclusivityWP9.pdf http://www.remesas.org/files/exclusivityWP9.pdf
        el-salvador 5y ago
        Most banks are not WU exclusive in El Salvador.
    - el-salvador 5y ago
      Most banks here support between 5 and 15 remittance companies. I wouldn't call it a monopoly.
  - lebuffon 5y ago
    Not true anymore. Moneygram and Ria Envia have been growing very fast to Latin America and there are numerous smaller firms stealing market share in the digital send space.
  - el-salvador 5y ago
    > Because WU has a monopoly on remittance payments in multiple countries. Not in El Salvador. A quick Google search shows that: A mid sized bank supports about 9 remittance companies. And a credit union supporting about 15.
- el-salvador 5y ago
  > Why does another company not come in to steal 9% to 24% of the GDP of the whole country? It's less than that. $ 400 million commissions / $ 24 640 million GDP x 100 = 1.66% of GDP. I am not familiar with how revenue is shared between the remitting companies, but part of those commissions are set to offset the costs of operating the remittance network in El Salvador. Operating offices, armored trucks, complaiace, bank staff wages and security expenses. 2019 GDP https://tradingeconomics.com/el-salvador/gdp https://tradingeconomics.com/el-salvador/gdp
  - lotsofpulp 5y ago
    I suspected as much, as is usually the case when someone posits a grand conspiracy.
    - zests 5y ago
      10% of 25% is 2.5%
      - lotsofpulp 5y ago
        Oops! I misread it as “10% to 25%” of GDP rather than “10% off of 25%”
lebuffon 5y ago
The actual take on remittances has been falling for 20 years. Western Union struggles to maintain a "premium" price now due to competition. The actual take on an average transaction from USA to El Salvador is way lower because El Salvador uses USD. So the only way to make money is on the Fee. (no foreign exchange revenue) If you send $50, yes the take is high because there is a bottom to the price. But the average sender sends $200..$300 and cost, as a percentage, drops rapidly with the amount sent. Many people thought bitcoin would destroy the remittance industry 10 years ago. It did not. People need money they can spend not bits in an exchange. Solve that last mile like Kenya did and maybe... I don't think bitcoin can handle the transaction volume for the global remittance industry on the person to person scale for "money in minutes" service. It's a better fit for bulk transfers to pay the agents in foreign countries.
- stann 5y ago
  Have you heard of Lightning Network?
  - cool_dude85 5y ago
    Sure! Got one you can show us?
    - lebuffon 5y ago
      MPesa, Kenya
  - lebuffon 5y ago
    Yes but beyond transaction speed there is the fact that people need/want the money immediately in a form that they can spend. These are not wealthy people. The remittance is for real goods. The last mile with money is "can I buy stuff now". Some African countries are moving fast in this area with mobile wallets but it has been slow generally. Maybe this decade...

lotsofpulp 5y ago

Why does another company not come in to steal 9% to 24% of the GDP of the whole country?

3434g34g34 5y ago
Because WU has a monopoly on remittance payments in multiple countries.
- lotsofpulp 5y ago
  Interesting. Is there any reading material available for how this monopoly is maintained? Are the country’s leaders being paid a cut for allowing WU to be the only money transmitter or something like that?
  - haskellandchill 5y ago
    People gloss over what goes into money transfer. There is substantial risk, verification of identity of recipient, etc. With Bitcoin the services are simply not offered, so it's not really comparable. You get irreversible money transfer to an bitcoin address nothing more and nothing less. Western Union's services go well beyond that.
    - lotsofpulp 5y ago
      I figured, I just thought I might ask for a source to lend credence to any conspiracy theory.
  - potiuper 5y ago
    Exclusivity agreements https://en.wikipedia.org/wiki/Western_Union#Anti-competitive_behavior https://en.wikipedia.org/wiki/Western_Union#Anti-competitive...
    - lotsofpulp 5y ago
      That makes sense. I would not have thought even a poor country’s bank would agree to that. But it does not seem to be a problem in El Salvador today. The situation is also getting better based on this report linked in Wikipedia: http://www.remesas.org/files/exclusivityWP9.pdf http://www.remesas.org/files/exclusivityWP9.pdf
      - el-salvador 5y ago
        Most banks are not WU exclusive in El Salvador.
  - el-salvador 5y ago
    Most banks here support between 5 and 15 remittance companies. I wouldn't call it a monopoly.
- lebuffon 5y ago
  Not true anymore. Moneygram and Ria Envia have been growing very fast to Latin America and there are numerous smaller firms stealing market share in the digital send space.
- el-salvador 5y ago
  > Because WU has a monopoly on remittance payments in multiple countries. Not in El Salvador. A quick Google search shows that: A mid sized bank supports about 9 remittance companies. And a credit union supporting about 15.
el-salvador 5y ago
> Why does another company not come in to steal 9% to 24% of the GDP of the whole country? It's less than that. $ 400 million commissions / $ 24 640 million GDP x 100 = 1.66% of GDP. I am not familiar with how revenue is shared between the remitting companies, but part of those commissions are set to offset the costs of operating the remittance network in El Salvador. Operating offices, armored trucks, complaiace, bank staff wages and security expenses. 2019 GDP https://tradingeconomics.com/el-salvador/gdp https://tradingeconomics.com/el-salvador/gdp
- lotsofpulp 5y ago
  I suspected as much, as is usually the case when someone posits a grand conspiracy.
  - zests 5y ago
    10% of 25% is 2.5%
    - lotsofpulp 5y ago
      Oops! I misread it as “10% to 25%” of GDP rather than “10% off of 25%”

lebuffon 5y ago

The actual take on remittances has been falling for 20 years. Western Union struggles to maintain a "premium" price now due to competition. The actual take on an average transaction from USA to El Salvador is way lower because El Salvador uses USD. So the only way to make money is on the Fee. (no foreign exchange revenue) If you send $50, yes the take is high because there is a bottom to the price. But the average sender sends $200..$300 and cost, as a percentage, drops rapidly with the amount sent. Many people thought bitcoin would destroy the remittance industry 10 years ago. It did not. People need money they can spend not bits in an exchange. Solve that last mile like Kenya did and maybe... I don't think bitcoin can handle the transaction volume for the global remittance industry on the person to person scale for "money in minutes" service. It's a better fit for bulk transfers to pay the agents in foreign countries.

stann 5y ago
Have you heard of Lightning Network?
- cool_dude85 5y ago
  Sure! Got one you can show us?
  - lebuffon 5y ago
    MPesa, Kenya
- lebuffon 5y ago
  Yes but beyond transaction speed there is the fact that people need/want the money immediately in a form that they can spend. These are not wealthy people. The remittance is for real goods. The last mile with money is "can I buy stuff now". Some African countries are moving fast in this area with mobile wallets but it has been slow generally. Maybe this decade...