This is true for a country like Brazil. In 2019, the Central Bank of Brazil established Pix, an instant payments ecosystem that allows people, companies and government organizations to send and receive payments in seconds, 24/7 and 365. In an effort to shift the population away from cash , this government-backed standardization has led to more widespread financial inclusion and efficiency. Brazilian financial services companies and fintech startups have already started working with this system and its introduction means a lot to Brazilian locals, especially for those without banks or in the informal economy, users chaveor key, to receive payment.
Whereas in Nigeria, because of BVN, or bank verification number—A unique 11-digit number that is uniform for an account holder across all organizations — identity theft is much harder. In Kenya, where traditional banking is challenging due to geographical distance, Vodafone and Safaricom have launched M-Pesa, an SMS mobile based payment system that also has a branchless bank and has helped secure the finances of millions of unbanked citizens. The rapid adoption of M-Pesa across East Africa, combined with the proliferation of modes of transport such as motorbikes and scooters, has spurred the development of new super-apps such as Jumia and Glovo making shopping and business interactions faster and more seamless.
“If I order eggs for my wife at Glovo while she is baking, there will be a knock on her door before she puts the pan in the oven. This is the speed and efficiency I’m talking about, which is difficult to encapsulate, because I don’t think Americans — or shoppers in general — are used to that efficiency,” said David Wachira, co-founder and CEO of Waya, a digital banking and payment app for Africans abroad. He also argues that M-Pesa may have reduced corruption and kickbacks in developing countries, because it is tied to private cell phone numbers.
Since the United States and its financial institutions and infrastructure have been in a position of “incumbent” and hegemony for so long, this legacy has continued to affect relationships with money for those who are not. services, especially in cross-border transactions and remittance payments. Africa remains one of the most expensive regions in the world to send money to, and many fintech startups are trying to tackle these challenges. However, the infrastructure that allows us to facilitate low-cost cross-border remittances to those destinations does not yet exist, said Wiza Jalakasi, vice president of commercial business at ChipperCash.
“When you go to a bank in South Africa, and you’ve got your South African money, and you ask them to buy Ugandan shillings, they’ll tell you we don’t have those because Ugandan shillings are in there. South Africa is foreign currency. The only currency you can get with your South African rand is the US dollar, euro or pound,” says Jalakasi. The US dollar acts as an intermediary in the intra-African financial world. That means currently, inefficiencies, slow transfers, and loss of money in multiple currency conversions only exacerbate historical global inequalities. However, with the right buy-in, these new players can disrupt some of them.
