The New Era: Money Transfer from New York to Lagos at Zero Fee Coming

The New Era: Money Transfer from New York to Lagos at Zero Fee Coming

If markets are perfect, there would not be companies. Yes, if buyers and sellers could transact businesses without frictions, we would not need companies. But since there are frictions in markets, we need companies. They provide services to “melt” those frictions. That is why we pay them, and they earn their fees.

In international remittance, there is a major friction. The friction here is that someone in New York has money to send another person in London (or Lagos) and doing that is hard. Typically, a bank exists to fix that friction. We pay the transaction/remittance fees. That is how Western Union, MoneyGram and banks make money.

But a startup thinks that technology has made it possible that the friction has gone, and that means there is no need to pay any company to “melt” that friction. That startup is Circle, a company funded by Goldman Sachs. It now allows entities to wire money from U.S. to Europe at zero fees. That is the new era. It has already arrived. They make the transfer without loss of exchange rate. It costs $0.

Blockchain-based payments startup Circle Internet Financial on Thursday launched an international online money transfer service that allows people in the United States and Europe to send money to each other instantly and at no cost as it seeks to tear down borders in the payments world.

The new service is part of a push by the “fintech” — or financial technology — sector to compete with established financial institutions, by using digital technologies to offer cheaper and more user-friendly services, often via smartphones.

Boston-based Circle Internet operates its app-based peer-to-peer payment network using blockchain, the technology which first emerged as the system underpinning cryptocurrency bitcoin.

One of the most well-funded blockchain startups, its investors include Goldman Sachs Group and Baidu.


“When’s the last time you sent a ‘cross-border email’?” Allaire said in an interview. “The idea of cross-border payments is going to completely go away. … Our vision is for there to be no distinction between international and domestic payments.”

Using Circle

On its website, Circle noted: “Finally. You can share money like everything else online — whether your friends are in the same room or a different country. Super easy and totally free. The way it should be. Free. We’re free to download and to use — wherever your friends are. Even between currencies, there are no exchange rate markups and no fees. (The rate we get is the rate you get.)”

How do you compete against zero? I am not sure, the new era is here. I do believe that within 7 years, we could move money from New York to Lagos at absolute zero transaction fees with no exchange rate markup. That is the real melting of friction, made possible by technology.


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2 thoughts on “The New Era: Money Transfer from New York to Lagos at Zero Fee Coming

  1. i like your write up, first time visiting your site from linkedin and i have spent close to 10 minutes reading different articles you’ve written.
    There is a big gap in this part of the world when it comes to transferring money from one country to another. This gap exists where a freelancer in Nigeria after rendering his service online to someone in the US, gets paid but rarely has the right means to move the dollars earned into his Nigerian bank account. such freelancer will have to rely on third party currency exchangers who may end up shortchanging the freelancer. if only a startup could come up with a solution that will enable the transfer of foreign currencies into Naira bank accounts without hassles, things will be alot easier.


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