Visa Europe Collab, the card network’s innovation team, is working with blockchain startup Epiphyte to explore blockchain-based remittances platforms. The companies hope to spend the next two months testing a blockchain-based remittances prototype on real-world transactions to see if it’s effective.

Blockchain technology, which powers bitcoin and other cryptocurrencies, has the potential to simplify financial processes. It could enable transactions to pass between two parties instantly and without the need for centralized authorities like clearing houses. That improved efficiency and increased security could simplify cross-border transfers and multi-currency transactions, which are key for remittance organizations.

Visa Europe and Epiphyte hope to develop a remittances protocol that offers customers lower fees and faster transfers. Sending money across borders is expensive – in 2014, migrants paid an average of 5.9% in fees on these transfers. Building a more streamlined system with blockchain technology could save money on infrastructure, which could trickle down to lower rates for consumers.

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Digital is at the forefront of the remittance industry right now. Despite comments to the contrary from industry leaders Western Union and MoneyGram, blockchain fits into that picture:

In Q3 2015, Western Union’s consumer-to-consumer (C2C) online revenue jumped 28%, compared to just 3% overall C2C revenue growth.

MoneyGram’s self-service segment grew 71% year-over-year (YoY) in Q3 2015, and the company now processes 15% of money transfer transactions through digital channels.

Blockchain technology could change the digital remittances industry. By being one of the first to build a successful blockchain-based remittances platform, Visa could stand to profit from licensing or selling that technology to other firms while becoming a leader in the space.

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