For millions of families across the globe, remittances are a lifeline. This money sent home by relatives working overseas helps to fund education, healthcare, housing, and necessities, from cooking oil to shampoo.
Yet, this crucial flow of capital is constantly hampered by a system riddled with inefficiencies. High costs. Frustrating delays. Middlemen. The reality in 2025 is that sending money across borders remains a costly and frustrating process, disproportionately impacting the very people who can least afford it.
Hidden costs, fees, waiting periods, bureaucratic hurdles, limited access points – these all constitute part of what we call the “invisible tax” on remittances. It’s a tax levied not by governments, but by the outdated infrastructure and predatory intermediaries that dominate the money transfer scene. This tax siphons important funds away from hard-working individuals, when it really ought to be going to families in need.
Something’s got to give. It’s about time we introduced a system that’s as fast, fair, and borderless as its users truly deserve. The answer, dear reader, is an innovative new concept called Deobanks. Decentralized on-chain banks, such as WeFi, leverage blockchain technology to level the playing field for those remitting money. Let’s unwrap this together.
The Problem with Today’s Remittance Systems
The traditional remittance system suffers from several critical flaws that contribute to the aforementioned “invisible tax”. These flaws are exactly why the system needs a reset and redesign.
High Fees
This issue stares us right in the face. Traditional money transfer operators (MTOs) and banks often charge exorbitant fees, ranging from a regional low of 5.01% in South Asia to as high as 65% with some MTOs in Tanzania!
Globally, sending remittances costs an average of 6.62% of the amount sent, according to The World Bank. In sub-Saharan Africa, the average cost is 8.38% of the amount sent, a global high in Q2 2024, while 5.53% in South Asia, impacting billions of people, is unacceptable. For families living on the margins, these fees represent a significant loss of crucial income.
Slow Transfers
In today’s digital age, the fact that international money transfers can still take days is simply unforgivable. Transactions often involve multiple banks, currency conversions, and compliance checks, all of which add congestion to what should be near-instant.
Transfers to remote areas or countries with less developed financial infrastructure can be particularly slow, passing on serious consequences for families relying on urgent remittances. In 2025, there’s really no need for this. The problem has already been solved.
Multiple Intermediaries
The traditional remittance process is characterized by a complicated web of intermediaries and middlemen, including sending agents, correspondent banks, and receiving agents. Each intermediary adds its own fees and increases the risk of errors or delays. This unnecessarily convoluted chain of actors causes an overt lack of transparency.
Access Barriers
The World Bank estimates that around 1.4 billion people, or around 17% of the world’s population, remain unbanked or underbanked. Traditional remittance services often require both senders and receivers to have bank accounts, government-issued identification, or physical access to a transfer outlet. This KYC requirement installs a significant barrier for those who lack these resources, forcing them to depend on informal or riskier channels.
All these issues impact some of the world’s poorest unbanked and underbanked populations, exposing them to all sorts of problems that eat into their hard-earned money. It’s not a good, nor fair system. How can they hope to escape their economic situation when the odds are stacked so heavily against them?
How Deobanks Solve This Problem
Deobanks, or decentralized on-chain banks, offer a pretty revolutionary approach to remittances by leveraging blockchain technology and smart contracts to bypass the outdated infrastructure and intermediaries that plague the traditional system. They are not banks in the traditional sense, but rather decentralized applications (known as dApps) that provide banking-like services.
Deobanks like WeFi can eliminate intermediaries, cutting fees and wait times, by facilitating peer-to-peer (P2P) transfers. At the same time, smart contracts can automate the transfer process for security and transparency without the need for human intervention. Also, you can do it from anywhere, using your phone or computer. You don’t need to go to a remittance office. MTOs’ days are numbered.
Near-instant settlements, especially using stablecoins like USD Coin (USDC) or Tether (USDT), allow for pegged fiat currency values to be sent, sparing normal people from the volatility typically associated with cryptocurrencies and the delays that are usual for overseas currency transfers. Deobanks therefore allow for faster and more predictable transfers that once took days to take place in minutes, 24/7, just using a device and an internet connection. No trips into town to the broker, no journeys to the bank. It’s all easily done with a smartphone.
Deobanks can also leverage AI-powered KYC solutions to streamline the onboarding process, making it more inclusive and accessible. These solutions can verify identity using alternative data sources and biometric authentication, reducing the reliance on traditional forms of identification.
Why Stablecoins Are Crucial to Cross-Border Efficiency
Stablecoins are arguably the bedrock of the entire new system for efficient cross-border transfers in the Deobank model. They eliminate volatility by being pegged to the US Dollar (typically), while drastically improving settlement times. USD Coin and Tether maintain their value during the sending process, offering predictability to both parties.
Traditional remittances have always struggled with this issue, as fluctuations have been known to erode the value of money while it’s in transit. That sort of risk, for the world’s most vulnerable, is hard to swallow in 2025. That’s why Deobanks like WeFi have designed stablecoin-native experiences that make sending and receiving digital dollars as easy as sending a text message. UX/UI are key to tapping into the blockchain’s full potential.
WeFi’s Borderless Transfers Without the Burden
WeFi is a prime example of how Deobanks transform remittances. Their platform offers stablecoin transfers with significantly cheaper fees than traditional services. Users will be able to connect their own non-custodial wallets, retaining complete control over their funds and private keys (a crucial aspect of financial sovereignty), while also facilitating QR-based and mobile payments. This all enables recipients to use their funds directly, with no costly and time-consuming cash-outs.
Recognizing that not everyone is comfortable with self-custody, WeFi also provides an optional custodial experience for those who prefer a more traditional approach.
Final Thoughts: Remittances Without the Middlemen
The “invisible tax” imposed by legacy remittance systems is not only outdated but also fundamentally unfair. Deobanks like WeFi offer a more ethical, efficient, and empowering alternative, with a more inclusive and accessible financial system that benefits everyone.
The future of remittances is here, and it’s decentralized, with no middlemen to try and take their share.
Source: The Invisible Tax of Remittances and How Deobanks Eliminate It
