San Francisco-based fintech company Ripple has announced three new partnerships in South Korea set to expand remittance services throughout the Indo-Pacific. Coinone Transfer, Sentbe, and Hanpass will join the blockchain-based network RippleNet seeking to enhance the services for Korea’s migrant workers.
The first mobile-based remittances app in Korea called Cross, developed jointly by RippleNet and Coinone Transfer, will speed up financial transactions to neighboring countries such as Thailand and Sri Lanka. The safe alternative to traditional banking utilizes technology to increase transparency and reliability of the transactions such as through real-time payment tracking. Since the app first launched in 2018, payment volumes have increased 50% per month, with fees reduced by 90% compared to bank transfers. In the other partnerships, remittance firm Sentbe will lead to consumer savings in money transfers between Korea and countries in East and Southeast Asia; Hanpass, another global company, will provide secure mobile services that bypass bank identification procedures.
Half of Ripple’s customers come from Asia. The company headquartered in San Francisco now connects 300 global financial institutions. In South Korea as well as Japan, Ripple collaborates through the joint venture SBI Ripple Asia ensuring continued expansion of the remittances market — currently worth $33 billion in South Korea. As of 2017, the country reformed its financial policies allowing for non-bank companies to offer remittance services to consumers where previously large financial institutions controlled the market. Currently, 2 million migrant workers in South Korea from countries such as Thailand and the Philippines, who sent approximately $6.3 billion worth of remittances out of the country in 2018. As a major exporting state, California accounts for 16% of US exports to South Korea. The United States on the whole invests $41 million directly to the country per year.
In South Korea, the number of foreign workers across sectors — notably mining, manufacturing, and construction — is rising. Low-wage conditions and long working hours are some of the challenges facing the workers. With the cost of sending money to Asia at 6.86% still double the 3% standard set by the United Nations Sustainable Development Goals for high-cost corridors, workers may face high hurdles to send money to their families. Other challenges include regulatory barriers, high costs from foreign exchanges, and strings of transactions involving multiple institutions that reduce transaction efficiency. Families that apportion three-quarters of remittances to meeting their basic needs may otherwise lack investment opportunities to build a self-sustaining future.
One of the aims of Ripple is to accelerate the uptake of technology in Asia, which still relies heavily on cash-to-cash transactions. Based on decentralized blockchain system to store information on transactions using the XRP digital currency, RippleNet reduces payment times to 3 to 5 seconds. “South Korea is a hotbed of fintech innovation, and we’re committed to grow our customer base and presence,” stated Emi Yoshikawa, Senior Director of Global Operations of Ripple.
Amanda Mei is a research intern in the Young Professionals Program at the East-West Center in Washington. She graduated from Yale University with a bachelor's degree in environmental studies in 2018.