Stellar for Remittances

With legacy systems, new entrants and growing fintech companies must establish in-country accounts and local bank relationships for every geography they wish to serve. Correspondent banks charge fees and make profit on the foreign exchange (FX) across currencies, which increases operating costs. To cover these additional costs, remittance service providers charge fees or build costs into the FX transaction thereby  passing the cost along to their customers. The end result is that remittance recipients receive less money.

How Stellar helps

Stellar records the movement of secure, digital representations of world currencies, helping businesses facilitate cross-border transactions without intermediaries like correspondent banks, but rather through two efficient payment standards. 

Businesses using Stellar can connect directly to a network of fully licensed fiat (traditional currency) acceptance and distribution partners called anchors. 

• Anchors are licensed and regulated financial institutions, money service businesses, or fintech companies that provide fiat on/off ramps to the anchor country’s banking system.
• Anchors often also provide ‘stablecoins’, one-to-one fiat-backed tokens, that users can redeem for fiat at any time.
• Anchors handle local regulatory processes such as KYC/AML.

Anchors take care of deposits, redemptions, and compliance, so businesses building on Stellar can focus on their customers’ experience. The typical Stellar-powered remittance experience is simple:

1. A sender funds the transaction in their country.
2. The funds are received by an anchor and represented on Stellar in the form of fiat tokens. 
3. Fiat tokens are converted over the Stellar network into the recipient’s currency via a path payment operation, using either the exchange rates on the Stellar Decentralized Exchange (DEX) or facilitated through a market maker.
4. ‍Funds arrive in the destination country. They can be transmitted to either the end-recipient’s wallet, bank account, or another local rail.

Anchors and the businesses they support leverage Stellar’s efficiency to provide new, cost-effective financial services and cut intermediaries out of the settlement process. There’s a growing list of anchors around the world.

Benefits of the Stellar Network

Whether your company becomes an anchor, or uses an existing one, you’ll still enjoy all the benefits of the Stellar network.

Start using Stellar for remittances