Video - Why Bitcoin is a Better Way to do International Money Transfers

This video explains how Bitcoin is way more advantage than sending funds using wire transfer or PayPal. It will let you know how to send money without any third party fees. It also tackles about no charge back risk when using Bitcoin.


This is why Bitcoin is a better way to do international money transfers.  John's a software consultant.  John's client in Germany needs to send him 1,000 U.S dollars for some work he did.  In the past, this is how John would receive his payment.  He could use PayPal.  The client in Germany would transfer euros from his bank account into a German PayPal account and then use PayPal to send the money to John's accounts in the U.S.  Now, John won't get the full $1,000.  PayPal takes a transaction fee of nearly 4%.  But wait there is more fees.  They'll also charge a currency conversion fee of 2.5% percent from the client.  And the fees don't end there.  The exchange rate PayPal uses as a retail rate and can vary widely from the actual interbank rate from 1 to 3%.  So, in total PayPal could be taking up to 8% to handle this transaction.  And yes, it gets worse for up to 60 days the client could claim a charge back.  PayPal instantly freeze a thousand dollars in John's PayPal account.  And if he doesn't have enough to cover this, PayPal will pull the $1,000 out of his linked bank account.  Pretty harsh.
Okay, so now let's look at the other traditional route.  A wire transfer.  In this case the interbank exchange rate is used and hopefully the bank won't front run John on the exchange.  The fee for a wild transfer on its senders in, is usually $25 but could be as much as $40.  But let's use $25 for this example.  For the receiver, it's typically $10 to receive a wire.  So, the total fees by the bank is about 3.5% and usually takes three to five business days to clear.  Now, let's compare that to Bitcoin.  At the current exchange rate, $1,000 will be about 9.5 Bitcoins.  Fortunately, Bitcoins have been embraced by the German government so there's an active exchange there.  The client can use his local currency to buy 9.5 Bitcoins on the exchange with a transaction fee of 0.5%.  He then sends the Bitcoins to John where he could either have it instantly converted over to U.S. dollars for a fee of 1% or manually traded at 0.55% because both exchanges are very liquid and you are transacting direct with the other Bitcoin holder with no bank intermediaries.  You're getting a very good foreign exchange rate as well as a very low Bitcoin transaction fee.
Additionally, with Bitcoin the transaction is irreversible.  There is no chargeback risk and the whole thing can be transacted in a matter of minutes, not days.  The total cost of doing this Bitcoin based exchange 1.05% to 1.5%.  So, let's recap 3.5% for a wire transfer and wait three to five business days.  8% in fees for a PayPal transaction, with the risk of a chargeback, 1.5% for a Bitcoin based transfer with no charge back risk.  It's pretty clear who the winner is.
To learn more about Bitcoin please visit  Coinrepublic, supporting the future of money.
Written by Melvin Draupnir on August 26, 2013.