China’s efforts to expand domestic goods into neighboring countries have taken a blockchain-based twist with the announcement that Alibaba’s Alipay is going to launch cross-border remittances between Malaysia and Pakistan.
The new service allows Pakistanis living in Malaysia to send money home using the Karachi-based Telenor Microfinance Bank’s Easypaisa digital payment solution as well as via Malaysia’s Telenor FinTech remittance company Valyou.
“This puts Pakistan on the map,” Tariq Bajwa, the State Bank of Pakistan’s governor said at a recent platform event in Islamabad that international remittances to Pakistan were worth around $20 billion per year, contributing around 6% in GDP. This, said Bajwa, was “equivalent to over 50% of our trade deficit, 85% of exports and over one-third of imports during 2017-18.”
“Very few countries in the world that have launched international remittances using blockchain technology, added Bajwa.
Roar Bjærum , Senior Vice President, Telenor Financial Services, said that currently, Pakistan receives about $1 billion in home remittances from Malaysia” and felt the platform’s transparency and swiftness “will redefine international money transfer in the country.”
Alipay acquired a 45 percent stake in Microfinance Bank for $184.5 million in 2018 and this week it announced the successful integration of its blockchain remittance platform, that reportedly relies on Standard Chartered Bank as the settlement bank, into this Pakistan-based network.
Alibaba affiliate Ant Financial, the formal parent company of Alipay, provides the platform’s powering technology and, aside from the purported reliability of blockchain, other potential benefits are said to include round-the-clock, real-time money transfers between the two countries, with Alipay’s transaction fees waived during the one-year trial period.
While China’s regional Belt and Road economic drive is being met with growing negative sentiment, especially in Pakistan, the remittance sector is proving to be a strong growth area for Asia-facing blockchain platforms.
Facebook is rumored to be working on a cryptocurrency-based remittance network for India, while in December 2018, when banking-focused blockchain network Ripple announced it is launching a blockchain remittance service to Asia along with United Arab Emirates-based UAE Exchange, Reuters estimated that about $613 billion worth of remittances were sent to Asian homes in 2017. It clear why China wants to be involved.