Possible idea for family economic connection

(Edit: I have made a presentation to try more clearly to communicate the idea).
So me and my wife support some of our family in Philippines for education costs and it occurred to me remittance as we know it today perhaps could be done better.

First some basic facts:
-Globally remittance costs are around 6-7% of sent amount according to this report
-In Philippines alone statistics (latest estimate from 2013) suggested some 4,3 million permanent offshore workers and some 4.3 million temporary (https://www.cfo.gov.ph/downloads/statistics/stock-estimates.html).

It also occurs to me that the whole system is based on a time when not everyone had mobile phones and a mobile network and you had to have a centralized network (for example visa) to process transactions. It also occurs to me that the solutions so far mostly has focused on the user alone for phone based payments and not so much on also the other side of the equation the merchant to help him/her as best as possible as well. Finally the whole system is also very much affected by anti laundry laws and also laws to give somewhat controlled access to being a banking service (banking lisences).

An idea I am thinking a bit about would instead of making transactions between a family member to another instead use the internet age to allow the family member to himself do transactions FOR others but BY himself thus not doing a transfer from person to person and sidesteping any anti-laundry & banking licenses requirements. To do this you would only need a family member abroad with a bank account and mobile and the family members without a banking card / no abroad work sends request over the app that the family member will spend money on any given transaction. So money does not change hand from family member a to b but only from member A to the Merchant and the service provider only provides the service for this much like how Uber only provides a service for cutting a centralized taxi service and same with cutting the banking requirements (much as cutting a taxi lisence).

Now that is the start portion of this idea. To facilitate this we need a dAPP that allows user to connect with family members and send request. Transactions process with a coin under Cardano for example a FAM (family transaction) token with ADA as fuel. We can then cut the 6-7% fees (I have seen them as low as 1,5% + flat fee) because we have no banking license cost and the transaction costs are miniscule and fixed so we can easily out compete at say a flat 1% rate. There are many ways to process this transaction. We can liquidate to cash (would take some of the margin) create a stable coin (while not a banking lisence we need to create a guarantee so a fixed fee) or by trust with issuing a FAM token per usd value possibly.) The general idea is to let the users have a founding on the system that is paid for by his banking account (like paypal) but with token. The token or bank money does not change hand from family member a to b but from family member A to merchant every time family member b request he does a purchases through the app and that he confirms. We need 0% transaction cost as the user carries the burden of cost (sim/mobile internet msg) for this and we can have a flat 1% conversion cost for transferring founds with a very high profit margin (transaction costs are like what 0.2$? + any fixed fee for all transaction for a stable coin guarantee + our network costs that should be minimal given that the merchant/users are processing and storing transactions)

The next step is the merchant side of things. In Philippines (as an example) there are some estimated 800000 merchants in what is called Sari-Sari stores having some 13% of the GNP (https://en.wikipedia.org/wiki/Sari-sari_store). Now these stores are usually makeshift with book keeping on pages or mobiles and they serve the economy because they run local tabs and is available in your local neighborhood cutting transportation costs. So how could we assist these merchants and thus create incentive for growth of our own system while also stimulating the Philippine economy? A few steps:

We put most of our profit margin back to the merchant with how the dAPP will work and it will create a self growing system. our dAPP needs to be able to make local QCODES that can be printed on a regular piece of paper and cut out so merchants easily can go to a local printing senter and print these out for a minimal cost per goods (0.001$ range or whatnot) while using a camera to connect the QCODE (unique and stored on ledger) to a said merchant goods and add info on it on the mobile app.
Now we give merchant a flat fee for using our transaction both for a local lending or cash point say 0.5% of our 1% margin. We give a bonus of 0.25% if using ADA (or perhaps a stablecoin FAM) as the currency instead of converting to cash. and we are left with a 0.25% margin. Now granted if 8 million offshore workers have 2 family members doing 1 transaction a week for 100$ that is still 216 million usd per year just showing some potential of this system.

Then we also let the merchants connect with each other and let them have statistics of goods sold. So as you can have a group of family members you can have a group of merchants. Then we let the merchant connect with the family user so that with either an sms code or a bluetooth handshake or some exchange the phone dapp of merchant know the history of user and could even assist with keeping tabs of local lending of merchant. It could even assist in doing tax report for the merchant. So we give the merchant a bonus to his margin and ease his burdens all through the phone he/she already have. That is incentive to adopt our system and is a powerful thing.

So overall what happens? Instead of bank/transfer agents pocketing say 5% of transfer fees (just in US some 12 billion https://www.pewresearch.org/global/interactives/remittance-flows-by-country/ or say 86,4 billion if 100$ for 8 million workers by 2 family members a week) we can put some 3,5 billion back to the user in reduced cost (users who are usually poor and cant even afford an own bank account and now suddenly have more money and we can lift more people out of poverty) and give merchants some 648 million in bonus payments while reducing margin costs by letting dAPP help with managing goods and tabs. Same goes for anyone actually using bank cards/visa we could cut the 1-2% transaction costs. We achieve this while not having added costs of a banking lisence (hopefully need to research the legal aspect more but I believe this is correct as we are only facilitating a service for a family member abroad to a merchant in a said country and I have yet to see a law in any country denying a user to make purchases abroad) while connecting more customers to merchants in a better way that helps both the customer AND the merchant.

So anyways I do not have time to this idea myself alone but I would like to hear others input if this is a bad idea or not and if someone wants to go for it why not I will support and perhaps I could even be part of a team working towards this? And yes I am aware of cryptocurrency used to TRANSFER money from a to person B and this as far as I can see has a 1-2% currency fluctuation cost and a flat fee so we can out compete this. Also I think letting the family member abroad spend money on his bank account through Cardano is superior to a transfer model both legally and efficiency wise.

2 Likes

How about using PayPal? You will need US and Philippines PP accounts

If I were you I would still stay away from crypts options.

We used Paypal at one point but it ate up quite a bit of the transaction in cost since banks in php need a monthly average amount on account and usually what was sent would be spent. You also had several transactions (with costs) - from paypal to paypal - to bank account then withdrawal from bank account. With that said I remember it being less expensive than sending bank wire transfer. I see that blooms offers a solution in the 1% range (https://www.bloom.solutions/personal-remittances) but you only get a rate of the day so in reality they are eating up more of the cost and legally since they are transferring from person to cashpoint pickup of another person they could be required more licenses and thus increasing costs. Currently my wife uses mostly worldremit and they usually have a lower currency rate than is available in the market (quick online look now and rate suggested is 49 for one usd while market rate is 51 so a hidden mark up of 4% and on top of that a flat fee)

I think the idea above is superior to all of the the current approaches.

really all you need to do is find a secure way to get 12 words to someone. Encrypted email is free and as long as you have reliable entry/exit points to get money in/out paypal is no better than cryptos

if you’re not ‘sending money’ as much as ‘transferring ownership’ then its basically free already. The only cost would be creating new wallets and whatever your choice of medium to send seed phrases

Yeah that is the idea but you do not need to send seed phases you tie it to a shared family account and for legal reasons I think it is important that the family user who has the money is the one who spends and approves a transaction. Connected family members can request such transactions to occur. Cost of such a system is minimal both financially and legally. The system only facilitates and makes possible the transaction with the merchant and the family member with the money.

I think the plan in Daedalus was to make permissions and levels of accounts so you can pull things like that.

In theory you could make an entire micro-banking system for your family

I know of shared accounts that require multi signature. But this would be different that it require only one signature but request from other connected / given permission for the said user to spend from wallet.

I think it is important to not make it a bank but facilitate only the transaction. Much like in many countries you can have uber faciliate that a person meets a driver without having a taxi lisence you try to faciliate an offshore transaction between a person and a merchant instead of from person a to person b then to merchant and having to go through a bank and require a banking lisence for said person to person transactions.

You need customer support, insurance, possibility to undo transaction, someone/institution willing to cash out (exchange for fiat) volatile crypto units in Philippines …

Dedalus yeah if you want to go trough cardano but why to use cardano , why not bitcoin which is likely to be bought by some toony in Philippines ? What if your family gets error message in dedalus (not unheard of) ?

Since the user approves every transaction there should be no need for customer support in any large degree. Same with merchant. They can undo the transaction if they want in the dAPP for the ada fee of a new transaction. This should be a minimal fixed cost the amount of customer support needed compared with number of transactions.

Since the founds are still tied to banking account and the user is only facilitated to merchant insurance is covered by abroad member banking. But yes if a stable coin you would need guarantees (see fixed cost in post.) For straight up ADA purchases yes you could insure this if you wanted to. Especially for larger transactions. But since this is for many small buys instead of one large transfer the insurance needs are way smaller. You could for example allow an abroad family member to auto accept any request of say under 10$ from family member B requesting he purchase from a merchant C.

Deadelus would not be used (atleast not in current form) as this needs to be on top of a mobile based wallet. Yes the software for wallets needs to improve for this to work.

Why ADA / Cardano and not Bitcoin? Oroborus Hydra will allow the throughput that is needed for this to work and not sit there waiting 2 hours for a transaction to go through and not using the energy of a frikking country or two. There is simply no better decentralized tech than what Cardano has to offer. Algorand will not be able to have the latency because it randomly picks users and will never scale to this type of billion potential users system. Etherium has a way worse delegation and is a worse decentralized system. Ripple would allow fast borderless contracts but would not empower the merchant with dAPP capability the way Cardano would and neither would it be decentralized for the safety of all users. Bitcoin uses massive amounts of energy and has a low throughput. Many others have high throughput but terrible decentralization. Finally it will allow localization as you can shard a FAM token in philippines with local latency and local network while still being connected with global safety of a Cardano network. Sharding the way Cardano does it is a huge deal.

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But who cares about (de)centralization, you want to send money in cost efficient and secure way - that is all

Decentralization combined with scalability gives a market edge centralization cannot give. Also for the users who are not interested in its features. It allows anyone with a bright idea to spread across a large network and scale up massively without any upfront cost. The users share the burden. So it allows social change like what is suggested above here cutting an effective bank monopoly away by scaling up with the users and automated through the computational power of the mobiles of the users. That again gives cost cuts that can be passed to the consumer. And the consumer is interested in saving money. This is something a centralized system by its very nature cannot do. It has the burden of scale not the user. (Granted you can have hybrid models). The decentralization also gives safety in many countries with large government intervention (devaluation of a currency etc) that they cannot possibly intervene. This gives a feature users want as they want to spend money freely for legal purposes and most legal frameworks express this will of the people, for example in EU with freedom of movement and goods. Since market economy by its nature is all about scale and in the future I think it will be about sustainable scalability then a decentralized approach that much more efficiently scales is simply a superior idea and will win out in any product and market it makes sense. The flow of currency between a consumer and a merchant seems to me at the very nature of a market economy to have a free flow of scalability and nations not adopting such an approach will be less economical superior to those that will accept such approaches. Of course there will be costs along with the benefits as nations loose control, but this has been the case for all of time for example as with how knowledge passed on books where only recently shared with the printing press then internet. In my example idea if it worked and on average 2 family members spent 100$ in remittance each week it could inject billions to consumers instead of international remittance corporations/banks thus creating a growth of GDP in Philippines as the money stays with the people there not to the international remittance corporations and it would mean taking a far less cut of the “pie” sort to speak but at a much lesser cost and ease of burden also for the service provider.

I think you worry too much about big picture, which may not be relevant for simple task which you want accomplish with your dapp and it is sending money home at low fees. If you have clear idea how to structure your algorithm , use known and established dapp network like eth, test code there and in a year or two when cardano debugs Shelly you can just compile your code on new network. This means you can start coding now.

That is a fair point. But since I have little developer time (i have a day job i like) i put the idea out there. Fact is I could never do this alone. But just like my governance ideas thread I hope to inspire people and would like to be part of a Cardano project if possible together with a team that had a realistic shot at making a prototype then take it from there.

This is all I was trying to say, really. If the task is money A to B then you don’t need any middle systems

You’re an idea man! Just start doing the footwork and networking with people who think like you. Some of the best connections I’ve made with developers has just been from off-the-cuff conversations with people. Maybe think about a meetup in your area to seduce some Devs

I still think, even though it looks straightforward , it may get tricky when real money kicks in (eg buying/selling crypto units for fiat).

Thanks. I live in a small town (granted we got university with Computer Science so we do have engineers) so it is very unlikely I will find someone to cooporate with locally. But yeah love your enthusiasm :slight_smile:

100% I was thinking a very romanticized version of ‘get the money across the border’ kind of thing. A new system of finance takes like you say - someone needs to be willing to buy it on the other end, and that system needs to have oversight.

To get his foot in the door he could try and own the crypto ATM’s on both sides of the trade.