Yellow Card, a pan-African fintech company, is advocating for the use of Stablecoins, saying they may mitigate risks linked to volatile local currencies, thereby promoting financial inclusion.
In an interview with ITWeb Africa, Sean van Kerckhoven, Yellow Card’s director of partnerships, said Stablecoins are becoming a huge driver for modernisation in African payment systems due to their ability to provide high-speed, low-cost money flows.
To this end, Yellow Card is actively engaging with regulatory authorities and banks to ensure compliance and promote the benefits of Stablecoins.
A Stablecoin is a type of crypto-currency designed to maintain a stable value, typically by pegging it to a reserve asset such as a national currency like the US dollar, or to a basket of assets.
Also, he emphasised the need for a proactive approach in collaborating with regulators to establish supportive licensing frameworks for Stablecoin transactions and the necessity of educating businesses on the advantages of Stablecoins.
The interview focused on the potential of Stablecoin payment application programming interfaces (APIs) to enhance business operations in Africa's evolving fintech sector.
In the interview, Van Kerckhoven highlighted the efficiency of payment APIs in facilitating market entry for companies by minimising the need for extensive local infrastructure and compliance.
He also addressed security concerns, asserting that Stablecoins often offer greater reliability than local currencies, and noted emerging trends such as their increasing use in payroll and remittances.
Kerckhoven also explained how payment APIs can significantly lower the costs and time required for businesses to enter African markets.
He noted that Yellow Card's payment API allows access to 20 African countries with a single integration, leveraging their established licensing and compliance frameworks.
Modernising African payment systems
This technology not only simplifies market entry but also aids in market testing and scaling operations, according to Kerckhoven.
He explained: “A lot of African start-ups are struggling to, from a cost perspective, really engage in global payments or cross-border payments. And I think what we've always wanted to do is to easily provide the infrastructure so that business can easily enter Africa, easily expand into Africa without having to outlay a lot of capital.
“I think we all know that expanding into new markets costs a lot of money. It's hugely delayed just because of setting up local entities, compliance teams, just all of those kinds of large overheads.
“And I think we've got the infrastructure and now we're leveraging it off to these businesses to allow them to quickly adapt, quickly enter the market, really start to drive the opportunity that is in Africa, which is financial inclusion.”
Explaining further how important Stablecoins are becoming in terms of modernisation of African payment ecosystem, he said: “I think Stablecoins have always been around and not many people understood the main use cases around them. I think, globally, the focus has really been on Latin America and Asia in terms of emerging markets and where they saw Stablecoin real use cases.”
He continued: “And I think in Africa, there are so much opportunities and so many challenges and I think struggles that people on the ground like us have to deal with on a day-to-day basis where our currencies are devaluated at such a rapid rate.
“And I think for me, Stablecoins, from a consumer perspective, allow us to hold value. It's a store of value. We're able to now to hedge against our volatile economy. I think in terms of sending funds, it bypasses a lot of traditional banking intermediary infrastructures, which causes huge delays, right?
“Because there’s a massive USD shortage in countries, so I think with that as well, Stablecoins plays a huge, huge role now in terms of providing high speed, low cost money flows in and out of countries.
“And again, like I said, just in terms of store of value. And I think, again, with global businesses, the fear and high risk of sitting with devaluating currencies always kind of puts them off, whereas I think now with Stablecoins allows them to have a lot more trust.
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