Western Union's revenue is under attack by the bitcoin exchange platform.

It is a foreshadowing offensive

For many years, banks and major financial institutions have had a stranglehold on international money transfers.

This stranglehold, which has been loosened slightly by financial and fintech startups such as Wise and WorldRemit, has allowed the companies to charge reasonable transaction fees.

And, as predicted by the industry, all of this is about to come crashing down due to crypto firms.

Coinbase (COIN), one of the most popular cryptocurrency exchanges, has announced that it is expanding into the remittances business, which is money that immigrants and expats send home to their families and or friends.

Western Union is a major player in this lucrative industry, the global remittance industry is expected to be worth $702 billion in 2020 and $1.23 trillion by 2030.

Expats and immigrants can now choose from a number of operators to send money to friends and family back home. Depending on the amount to be sent, they can complete the transaction either online or in person.

Transaction fees are calculated based on the amount sent and how quickly the sender wants the recipient to receive the funds. The recipient must have an identity document, the transaction tracking number, and sometimes the reason for the transaction in order to recover the money. Fees range from 0.4% to 7%.

Coinbase claims to have created a low-cost cross-border money-transfer service. The platform will begin a pilot in Mexico before expanding to other countries, most likely later this year.

"We acknowledge that this is a global problem. While we begin in Mexico, we will consider other regions where customers face similar challenges in the future "In a blog post, Shilpa Dhar, vice president of product, and Moheeth Alvi, lead product manager for payments, stated.

They continued, " "We want to make it quick and simple for users to send cryptocurrency to anyone in the world, and we want recipients to be able to participate in the cryptoeconomy. We have only just begun."

How Does Coinbase's Funds-Transfer Service Function?

Customers use the Coinbase app to send cryptocurrency to Mexican recipients. According to the company, once the funds are sent, the recipient will receive a notification and will be able to immediately view their cryptocurrency balance in their Coinbase account. The recipient can then choose whether to cash out or keep the funds in their Coinbase account.

According to the crypto exchange, it has partnered with 37,000 physical retail outlets and convenience stores throughout Mexico where customers can receive cash.

Customers who wish to keep their funds on Coinbase can do so by converting and investing their balance in any of the cryptocurrencies supported by Coinbase. In this case, they can protect themselves against currency depreciation by purchasing USDC, a stablecoin tied to the US dollar, according to Coinbase.

What Is the Coinbase Service Price?

Customers must pay transaction fees after the service is free through March. Coinbase has not yet specified the fees or whether they will be calculated based on the amount of the transactions. According to the crypto firm, these fees will be "25 percent to 50 percent less than traditional cross-border payment solutions."

Coinbase is not the first crypto firm to seek to disrupt legacy remittance firms. Novi, a similar experiment was launched in Guatemala by Facebook, now Meta Platforms.

These companies, which are looking for new revenue streams, frequently explain that they are motivated by the cryptosphere's stated goal of combating financial exclusion.

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