Chipper Cash, a fintech startup in Africa, has expanded its peer-to-peer instant money service to South Africa. In addition to being able to use the remittance service, South African users will be able to buy, sell and transfer cryptocurrencies such as Bitcoin, Ethereum and USDC stablecoins.
South Africa is ready for disruption and innovation
According to a report quoting the startup’s vice president for strategy and partnerships in Africa, Pardon Mujakachi, Chipper Cash invaded South Africa because it believed the country was “ready for disruption and innovation in the financial services market.”
The report also quotes the vice president revealing the fact that it takes “three days for a person in the US to send money to South Africa” while on the other hand, it takes up to 48 hours to transfer money from one bank to another.
Mugakashi argues that it is these shortcomings that often drive users to informal channels. The vice president also shared figures on the estimated number of users forced to use such unofficial channels. He said:
People end up using informal channels to send money. If you look at remittances out of South Africa, 68% of them go through informal channels. Even with local transfers, a large amount passes through the informal channel.
According to Chipper Cash VP, these local transfers will be the starting point for a fintech company in South Africa. However, only verified users will be allowed to use this app.
The dominance of ancient money transfer organizations
Chipper Cash, just like other fintech startups before it, is trying to claim a significant portion of the cross-border remittance market share from established money transfer institutions (MTOs).
By offering lower transaction costs, Chipper Cash will likely have the opportunity to gobble up market share for existing MTOs. However, it remains to be seen if this mobile application will win over the financially excluded groups in South Africa. This is because in addition to not having the required verification documents, some in these financially excluded groups do not have access to the hardware needed to use the mobile app.
What do you think of this story? Tell us what you think in the comments section below.
photo credits: Shutterstock, Pixabay, Wikicommons
disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the Company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.