Sending money overseas can sometimes be an ordeal. Long wait times, unfavorable exchange rates, and exorbitant fees aside, it’s also not uncommon to hear of stories involving fraud and theft via money transfers.
So imagine the complications and hassles for the 2.5 billion people in the world who are unbanked or underbanked. Often denied access to basic financial services, the unbanked don’t have access to bank accounts to send or receive money locally or abroad.
The unbanked’s solution lies in remittance services.
What if there was a better way to send money abroad? A method that is fast, cheap, secure, and accessible to anyone with a mobile phone and internet connection.
Enter Stellar for remittance.
Stellar is an open-source blockchain network that enables cross-border payments via lumens (XLM), its native cryptocurrency. Backed by a dedicated development foundation (SDF), Stellar aims to harness blockchain technology to connect people, payment systems, and banks around the world.
In this article, you’ll discover how Stellar enables cost-effective cross-border payments and how you can start saving on international money transfers by using Stellar lumens (XLM) - the native cryptocurrency of the Stellar blockchain.
How Stellar Facilitates Cross-Border Transfers
There are two key ingredients in Stellar’s cross-border transfer recipe: XLM and StellarX (SDEX), its own decentralized exchange.
Unlike the traditional financial system, you don’t need an intermediary like a bank or financial institution to execute your international payments. You also don’t need to go through the hassle of converting your currency to that of your recipient.
With Stellar, you simply use StellarX to convert the amount you’re sending to XLM before sending it to your recipient’s wallet. The recipient can then choose to hold the XLM or convert it to their currency. This trading process is executed almost instantaneously — a far cry from the traditional method of sending money across borders.
Save Money With Stellar: Stellar vs Traditional Methods
Stellar offers several advantages over traditional methods of sending money abroad, like remittance and wire transfers.
Here are some ways Stellar helps you save money on your cross-border transfers:
Stellar: Stellar charges a small fee of just 0.00001 XLM (about $0.0000003) per transaction, regardless of the amount or destination of the payment. This fee is used to deter spam and maintain the network’s security.
Traditional methods: Traditional methods of sending money abroad can charge anywhere between 0.3% and 20% of the transaction amount.
Competitive Exchange Rates
Stellar: Allows you to exchange any asset on the network at the best available price using the SDEX or a third-party service provider. You don’t need to worry about hidden fees or markups.
Traditional methods: Often use unfavorable exchange rates that can cost you up to 5% or more in losses.
Stellar: Transactions are confirmed in 3-5 seconds, meaning you can send and receive money almost instantly.
Traditional methods: Take days to process.
Stellar: Transactions are encrypted and verified by multiple nodes on the network, making them resistant to fraud, theft, and censorship. You don’t need to trust any third-party intermediary or reveal any personal information when sending or receiving money via Stellar.
Traditional Methods: Often require you to share sensitive data with various intermediaries, exposing you to identity theft or data breaches.
Stellar: Is accessible to anyone with a mobile phone and an internet connection — you don’t need a bank account or credit card to use it. You can simply set up a Stellar-compatible wallet and create an account on the network. Various on and off-ramps are also available for you to convert your local currency to XLM or vice versa, such as AnchorUSD, Wirex, or Lobstr.
Traditional Methods: Often require you to have a bank account or credit card; this is neither feasible nor affordable for the unbanked and underbanked.
How to Get Started With Stellar
Ready to use Stellar and XLM to send money across borders? Here are your next steps to get started:
1. Download an XLM-Compatible Wallet App
Before you can start using XLM to send funds abroad, you’ll first need to set up a wallet to hold your coins. Apart from storing, sending, and receiving XLM and other Stellar network assets, your wallet serves as a crucial gateway for you to view your transaction history and access the SDEX.
Some XLM-compatible wallets include:
2. Fund Your Wallet
Once you’ve set up your wallet, your next step is to fund it with XLM. You can easily buy XLM from StellarX itself, where you don’t have to go through any lengthy registration process to make your first purchase.
Image credit: StellarX
StellarX supports a broad range of payment methods, including credit or debit cards, bank transfers, Apple Pay, and Google Pay. Simply pick your preferred payment method and confirm your purchase, and you’ll receive your XLM in a few minutes.
Alternatively, you can buy XLM via Bake. Bake offers the lowest rates on your crypto purchases across the market, and you’ll also receive your XLM instantly after you complete your buy!
3. Send and Receive Money
With your wallet set up and XLM in hand, you’re ready to send and receive money on the Stellar network.
To send money to your recipient, get them to share their public address with you. You’ll then input their public address in your wallet app, specify the amount of XLM or other assets you want to send, and confirm the transaction. Your recipient can then choose to convert the XLM into their preferred fiat currency or hold the cryptocurrency.
To receive money, share your public address with the sender. Your public address is easily available on your wallet app, which you can either copy or save as a QR code. With your public address, your sender can transfer XLM to you. Once the transaction is complete, you decide between converting your XLM to fiat or leaving it as it is.
Send Money Without Paying Hefty Fees With Stellar
Stellar takes the complexity and hefty fees out of cross-border payments with its native cryptocurrency, XLM. With its low fees, competitive exchange rates, fast transactions, high security, and wide accessibility, Stellar simplifies international money transfers to provide financial access and inclusion for everyone.
Ready to take part in Stellar’s financial revolution? Head over to Bake and purchase your first batch of XLM now.
DISCLAIMER: Please note that the information on this blog and in any articles posted on this blog is for general information only and should not be relied upon as financial advice. Cake Pte. Ltd., Bake, UAB, and its affiliates (the “Cake Group”) are not licensed financial advisers. You may wish to approach your own independent financial advisor before making any decision to buy, sell, or hold any product and/or digital assets mentioned in this blog.
Any views, opinions, references, assertions of fact, and/or other statements are not necessarily the views held by the Cake Group. The Cake Group disclaims any liability whatsoever that may arise out of or in connection with such statements. Always do your own research before investing in any financial assets, and consult a qualified financial advisor if necessary.