Bitcoin works great at small scale where you have a company on the receiving side willing to buy up the excess incoming volume at par with international costs. If a lot of people started doing it though there would be a lot more local sell pressure and the prices people could get in that country would drop and raise the overall cost of the transaction.

Bitcoin can be good for remittances but if it becomes popular in a region it will out price itself for that and other reasons.

Also almost all bitcoin services I've seen so far have saved money two ways. 1. They have offloaded the last mile cost on another service(a banks ATM network, or corner store, etc). If it becomes popular those services are going to start wanting their cut much they same as WU would pay them. 2. They ignore KYC. Again if they get popular the banking industry will definitely apply pressure to get them to start following this which will again increase costs.

If you're underbanked you're probably not likely to be able to use or convert your BTC at the other end of the transaction, hence the value of that expensive "last mile" at Western Union or Moneygram. The exceptions the article discusses are the mobile money consumers in Africa, but here the conventional remittance fees are also a lot lower.

A quick apples to apples comparison suggests that converting sterling to Kenyan Shilling denominated M-PESA mobile money costs around 4-5% including forex and fees via Western Union and Moneygram (unlikely to be the cheapest of many providers in the marketplace) whilst sending to M-PESA via the BBC-advertised remittance services costs a 3% forex fee plus cost of obtaining Bitcoin (surprisingly expensive if your salary is paid in GBP; I'm struggling to see any options below 1%, and the cheaper ones aren't instant either).

There might be an advantage for the Bitcoin remittance services, but perhaps not one worth the additional inconvenience, delay and counterparty risk. Downward pressure on the major remittance firms' prices is always welcome, but given the relative lack of demand to convert in the other direction from KSH to BTC, the cost bases for these cryptocurrency enabled entrants into the market might actually be higher than the major remittance firms, especially if they grow...

In practice, even rebit.ph (which is having a good go at the remittance case) is having serious problems finding Bitcoin buyers at the Philippines end (because every peso you give out, you need to have sold Bitcoin to buy) - http://www.reddit.com/r/BitcoinMarkets/comments/2vypy9/if_i_...