For years, blockchain proponents have proclaimed that the technology could reduce costs in the multibillion-dollar international remittance industry. It's taken some time, but that vision is slowly becoming a reality.
On June 25, 2018, AlipayHK and GCash announced the launch of their blockchain-based money transfer service to connect customers in Hong Kong and the Philippines. The project's blockchain component was developed by Alipay, the "online payment platform operated by Ant Financial Services Group."
Ant Financial is an affiliate of Alibaba. Standard Chartered will be the settlement bank for AlipayHK and GCash.
"Traditional financial institutions serve 20 percent of people and make 80 percent of profits," Alibaba's executive chairman, Jack Ma, said after Monday's launch. "New financial institutions should [serve] 80 percent of people and make 20 percent of profit."
Per the South China Morning Post (SCMP), Ma explained, "This comes from a promise I made a long time ago when Alipay was just launched. I have Filipino friends who asked me when they could use Alipay to send money home because it was too expensive through banks, which charge too much."
Disclosure Note: Alibaba owns SCMP.
Each year, Filipinos working in Hong Kong send approximately 4.4 billion Hong Kong dollars (equivalent to $561 million) to recipients in the Philippines, according to SCMP. An April 2018 report by the World Bank found that the Philippines represents the third-largest remittance recipient country overall ($33 billion). The Philippines trails only India ($69 billion) and China ($64 billion).
It appears that the US's act of blocking Ant Financial's attempted $1.2 billion acquisition of MoneyGram became the impetus for the company's investment in cutting-edge financial services. In January 2018, the Committee on Foreign Investment in the United States rejected the deal based on supposed national security concerns.
Today, Ma said, "At the time we wanted to [buy] MoneyGram and overhaul it to help people all over the world solve this issue. Due to reasons from the US our deal with MoneyGram did not succeed, so I said, 'Let's make one better [than MoneyGram]' that uses the most advanced technology."