In 2020, El Salvador received nearly $6 billion in remittances, which accounted for about 23% of its gross domestic product.President Nayib Bukele estimates that money services providers like Western Union and MoneyGram will lose $400 million a year in commissions for remittances, thanks to the country’s bitcoin adoption.Some 70% of the Salvadoran population receives remittance payments.
Jaime García really hates using Western Union to send money home to El Salvador.
“In this day and age, it is wild that I had to go to a physical Western Union office, give them actual cash, and then hand them another $25 on top of that, before they would send my money over,” García said.
“And then, of course, it takes three days for it to actually arrive in El Salvador.”
García, who lives in the Canadian province of Saskatchewan, fled El Salvador when he was 11 after rebels bombed his house. His biggest issue with wiring cash abroad is less the inconvenience on his end and more about what happens to his loved ones receiving the money.
“They have to take a bus to go to a physical location to pick it up, and there are gangs that hang out around those offices. They know what people are going there for, and they basically rob them,” said García, who leads a team of researchers at SGI Canada Insurance.
Since he last sent money home, García told CNBC, he now has the option to make an online payment via the Western Union app, but he still faces steep fees – 12.5% for a $100 transfer – and it doesn’t solve the problem of what happens to those picking up the cash in El Salvador.
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