Large and small companies alike are searching for a more streamlined process for making wire transfers—one that eliminates existing inefficiencies and costs less than what banks charge, according to research conducted by the Federal Reserve Banks and The Clearing House.
This is just the problem Align Commerce is trying to tackle. Align Commerce aims to simplify cross-border payments for U.S.-based businesses that do business overseas. They do this by utilizing blockchain technology to eliminate the “middleman,” in which the middlemen are financial institutions, like banks, between you and where you want your money to go.
Using Align Commerce, businesses can send a payment overseas in 1 to 3 business days. They charge one rate per transaction—there are no added foreign exchange fees, or fees charged to both the sender and receiver like you might find at a bank. The cost structure is organized as tier pricing, in which:
- a $15 fee is applied to the recipient if the transfer is sent in U.S. dollars to a U.S. dollar bank account.
- a 1.9% flat fee is generally applied for overseas transactions, but transactions can be done for as little as 1.5% if the transfer amount is over $50,000.
They currently service 24 countries to which you can send and receive money, as well as an additional 37 countries to which you can send money. See their full list of countries they service here.
How it works
Verifying your account with Align Commerce can take up to three business days but is instant in most cases. Once you have your account, you can upload or email your invoices and an Align Commerce account manager will take care of the transaction.
Here’s how a transaction might work, according to the Align Commerce website:
A U.S.-based company wants to send a payment of $1,000 to their web developer in the Philippines.
Using a theoretical internet rate or interbank rate (Google, Reuters, Bloomberg) of US$1 = PHP 44.43, Align Commerce applies a 1.9% fee rate to get the transaction rate of PHP 43.59.
Let’s say the U.S. business in question has a Bank of America account. So the $1,000 U.S. is debited from that account and PHP 43,589 will be deposited into the web developer’s Bank of the Philippines account. This process takes 1 to 3 days and is completed via blockchain.
Blockchain technology serves as a way to transfer your money to anyone in the world. The way it works is the blockchain stores your transaction information, along with other information of various origin, across a network of personal computers. No company or person owns the system and is thus decentralized, and the system ensures the records cannot be modified. So instead of using financial institutions, or banks, as a middleman, where the money must be transmitted through a number of intermediary banks, the blockchain transaction is verified by users in the blockchain network who earn a very small fee.
Who is it good for?
Outgoing international wire transfers from a bank can come with a $30 to $60 fee per transaction, plus any additional foreign exchange fees. In addition, many banks charge a fee for both the sender and the receiver (outgoing and incoming wire transfer fees).
In the case of the example above where a business is sending its web developer $1,000, they’d likely be better off using Align Commerce—the service will be more streamlined, and the fee turns out to be $19.
Businesses that regularly wire a significant amount of money might want to consider all other options, including banks and other nonbank providers like TransferWise, Western Union, and online providers.
This article was originally written on January 26, 2017 and updated on April 4, 2019.