That is true for a country like Brazil. In 2019, the Central Bank of Brazil created Pix, an instant payments ecosystem that allows people, businesses and government agencies to send and receive payments in a matter of seconds, 24/7 and 365. In an effort to move the population away from cash, this government-backed standardization led to greater financial inclusion and efficiency across the board. Brazilian financial services companies and fintech startups started working with the system, and its introduction meant a lot to local Brazilians, especially those without bank accounts or in the informal economy, who want to share their unique chaveor key, to receive payments.
Meanwhile, in Nigeria, because of the BVN, or bank verification number – a unique 11-digit number that is uniform for an account holder across all institutions – identity theft is much more difficult. In Kenya, where traditional banking has been challenging due to geographic distances, Vodafone and Safaricom launched M-Pesa, a mobile phone-based SMS payment system that also enables branch-free banking and helped secure finances for millions of unbanked people. The rapid adoption of M-Pesa in East Africa, combined with the popularity of transportation methods such as motorcycles and scooters, led to the development of new super apps such as Jumia and Glovo that make shopping and business interactions faster and more seamless.
“When I order eggs for my wife from Glovo while she’s baking, there’s a knock on her door before she puts her pan in the oven. This is the speed and efficiency I’m talking about that’s really hard to grasp because I think Americans — or people who shop in general — aren’t used to that efficiency,” said David Wachira, the co-founder and CEO of Waya, a digital payment and banking app for Africans abroad, also argues that M-Pesa may have reduced corruption and bribes in developing countries because it is linked to individual mobile numbers.
Because America and its financial institutions and infrastructures have served in an “incumbent” and hegemonic position for so long, this legacy has continued to haunt money relations for the underserved, especially in cross-border transactions and remittances. Africa remains one of the most expensive regions in the world to send money to, and many fintech startups are trying to solve these challenges. However, the infrastructure that will allow us to facilitate low-cost, cross-border transfers to those destinations does not yet exist, said Wiza Jalakasi, Vice President of Merchant Business at ChipperCash.
“If you go to a bank in South Africa and you have your South African rand and you ask them for Ugandan shillings they will tell you we don’t have those because the Ugandan shilling in South Africa is an exotic currency . The only currency you can get with your South African rand is the US dollar, the euro or the pound,” says Jalakasi. The US dollar plays an intermediary role in the intra-African financial world. That means inefficiency, slow transfers and losing money in multi-currency conversions will only exacerbate historic global inequalities for now. However, with the right buy-in, these new players can bust some of them.
