Crypto Banking Embraces USSD Solutions to Drive Financial Inclusion
One notable innovation is the recently introduced Machankura. This platform allows users to establish a Bitcoin wallet by simply dialing a USSD code.
By Anna B Kiwanuka
Cryptocurrency enthusiasts are embracing innovative access methods that don’t solely rely on internet connectivity. This shift aims to extend its reach to the unbanked population, a potentially valuable segment. These evolving solutions might usher in new users into the cryptocurrency fold using straightforward quick codes, enabling digital asset use without the need for the internet, smartphones, or advanced technical knowledge.
These groundbreaking innovations leverage Unstructured Supplementary Service Data (USSD) codes, enabling even the less tech-savvy individuals to access the conveniences offered by digital assets. This approach could potentially expedite cryptocurrency adoption across the continent, bringing the longstanding goal of enhancing financial inclusion one step closer to realization.
One notable innovation is the recently introduced Machankura. This platform allows users to establish a Bitcoin wallet by simply dialing a USSD code. The same code facilitates Bitcoin transactions, including sending, receiving, and cashing out, all at a minimal transaction fee of around one percent. Those possessing smartphones but lacking technical familiarity can opt for a WhatsApp chatbot to set up and manage their wallet, ensuring accessibility across all phone types.
Machankura’s founder and CEO, Kgothatso Ngako, emphasized that the concept arose from necessity. Given that many Africans rely on feature phones that might not be suitable for internet access or Bitcoin applications, the aim was to enable anyone interested in Bitcoin transactions, regardless of their device’s sophistication.
Another noteworthy player in this space is Kotani Pay. This platform, too, leverages USSD technology to grant users access to a blockchain wallet. This wallet can be used for sending, receiving, and converting stablecoins—cryptocurrencies backed by tangible assets. Felix Macharia, CEO and co-founder of Kotani Pay noted that while their primary customers are businesses, the solution was also driven by the significant number of Africans who still utilize feature phones for communication.
Global System for Mobile Communication Association (GSMA) statistics from 2021 highlight that only 49 percent of phones in Sub-Saharan Africa were smartphones, a figure projected to rise to 61 percent by 2025. This underscores the need for solutions that cater to the majority who don’t possess smartphones, potentially providing access to over half of Africa’s population that couldn’t otherwise engage with cryptocurrencies.
Beyond accessibility, operating crypto wallets via USSD holds the potential to reduce transaction costs, especially for cross-border transfers drastically. This could potentially challenge traditional banks and international money transfer agencies, which typically impose higher fees.
Innovation in cryptocurrency, such as Kotani Pay, is already benefiting charity organizations that utilize the platform for low-cost cash transfers to refugees and those in dire need on the continent.
These USSD-based solutions could also catalyze the growth of the gig economy by facilitating affordable cross-border micro-task payments for the predominantly youthful workforce. Additionally, these solutions could support access to loans and savings, offering a hedge against local currency depreciation.
Through these use cases and possible future applications, cryptocurrencies may play a pivotal role in enhancing financial inclusion in Africa. The World Bank reports that around 45 percent of African adults lack a bank account, a figure that these crypto innovations aim to address.
Despite these promising developments, challenges persist. Ignorance and distrust surrounding unconventional digital assets remain barriers, even among tech-savvy youth and affluent populations. Education and fostering trust are crucial aspects for these solutions to make a meaningful impact.
While these emerging solutions hold great promise, blockchain researcher David Otieno suggests that widespread awareness and appreciation of the financial transformation potential of blockchain and cryptocurrencies still need to be improved. Time, regulatory clarity, and trust-building efforts will be needed for substantial progress in financial inclusion and crypto adoption across the African continent.
Regulatory hurdles represent a significant challenge for these initiatives. While Machankura and Kotani Pay are incorporated in South Africa, where the regulatory landscape is more conducive, uncertainties in other African markets hamper growth and scaling efforts for blockchain companies.
In conclusion, the adoption of USSD solutions within the crypto-banking sphere signifies a step forward in enhancing financial inclusion across Africa. These innovations address accessibility challenges and transaction costs, potentially revolutionizing the way financial services are accessed and conducted on the continent. However, navigating regulatory issues and building trust remain vital factors in ensuring the long-term success of these endeavors.