Advancing financial inclusion bridging traditional payments rails

…how a blockchain platform and an African fintech are revolutionising cross-border commerce

Africa has long faced steep barriers when conducting international business and moving money across borders. Entrenched in complex procedures, exorbitant fees up to 10% and processing delays spanning several days, the status quo has severely hindered seamless global commerce. However, a promising new partnership between US-based blockchain platform, TBD, and African fintech startup Yellow Card offers ripe potential to transform this landscape.

Announced last year at the African Bitcoin Conference, the collaboration will integrate Yellow Card’s payments network covering 16 African countries with TBD’s developer tools bridging traditional finance to cryptocurrencies. By leveraging the efficiency of stablecoins and blockchain technology, the joint infrastructure aims to provide the African diaspora with fast, affordable remittances and cash-out options to receive funds in local currency.

The partnership aligns with TBD’s vision for driving mainstream adoption of digital assets, spearheaded by its global on- and off-ramps enabling fiat and crypto interoperability. Meanwhile, Yellow Card seeks to unlock financial access across underbanked groups through its mobile banking and bitcoin exchange services. Together, the two companies successfully tested real-time US dollar transfers to bank accounts and mobile wallets in Ghana, Nigeria and Kenya during a pilot in March.

But this nexus between innovation and inclusion signifies more than faster payments. Under the hood, it encapsulates a decentralisation philosophy that may radically redefine how the world – especially those left behind – can participate equitably in the global economy.

The Power of a ‘Borderless Protocol’

Essential to this equation is Bitcoin and its underlying blockchain protocol – characterised by cryptographer Nick Szabo as “a global spreadsheet” that can transfer value without centralised intermediaries. Harnessing this ‘triple entry’ system across borders, TBD and Yellow Card can facilitate transparent, tamper-proof transactions while slicing hefty fees extracted by traditional middlemen.

“The beauty of cryptocurrencies, particularly Bitcoin, lies in their nature as the first truly borderless, internet-native global currency,” explained Chris Maurice, CEO and Co-Founder of Yellow Card. “Unlike traditional payments constrained by legacy systems, Bitcoin enables direct point-to-point transactions – eliminating delays, reducing costs and overcoming limitations imposed by fragmentary banking infrastructure across Africa.”

Through a unified ‘language’ running on decentralised infrastructure, TBD allows applications to embed functionalities that connect senders and recipients worldwide. Backed by Bitcoin as a censorship-resistant monetary rail, dollars or other currencies can flow more freely as digital variations and integrate seamlessly with existing local payment systems. No longer must businesses or individuals rely solely on bureaucratic channels controlled by gatekeeping institutions.

“What TBDex does for businesses is provide a unified language for transactions – learn it once to connect with anyone globally,” said Emily Chiu, TBD’s Co-Founder & COO. “This permits seamless sending of money akin to speaking a common Internet language. The unique feature of TBDex is enabling the discovery of liquidity and execution of cross-border transactions in real-time.”

Previously, African companies trading globally had few efficient recourses. However, TBD and Yellow Card furnish agile tools to navigate this terrain. Whether receiving client payments or importing critical supplies, businesses can sidestep chronic obstacles that hitherto encumbered operations. Such flexibility can significantly expand market opportunities beyond previously imposed constraints.

Trustless transactions drive financial inclusion

The default absence of trust between strangers underpinning Bitcoin’s algorithms may seem counterintuitive to human behaviour. But this feature presents breakthrough potential to bring financially excluded groups into the formal economy.

Far too many worldwide, like those without extensive credit histories, continue being denied basic financial access by risk-averse institutions. However, decentralised apps fostered by TBD can circumvent such discrimination by design. Following cryptography-enabled verification and running on crypto as a transport layer, applications can facilitate rich participation in commerce without centralised gatekeepers banning users arbitrarily.

Regulation remains vital, but decentralised technology opens new avenues to resolve trust and inclusion barriers affecting millions unable to access the financial mainstay. And progress in the domain is advancing through digital identity systems that balance privacy and legitimacy concerns.

As Chiu explained, “TBD is integrating identity and compliance. Transactions require identity verification to prevent fraud. We’re adhering to World Wide Web Consortium standards for globally-accepted secure online identification that ensure privacy while fostering legitimacy”.

These features underscore bitcoin’s potential as a great leveling mechanism. Coupled with TBD and Yellow Card’s tools optimising usability, cryptocurrency infrastructure could propel an unprecedented surge in financial inclusion and economic participation – a profoundly democratising force favouring grassroots entrepreneurs.

Macro Impacts: Boosting affordability and resilience

On a macro scale, easing frictions that encumber cross-border transactions can increase affordability and monetary flexibility significantly. Take Nigeria grappling with high inflation or Zimbabwe recovering from currency collapse; broader access to stablecoin dollars or Bitcoin as a censorship-resistant store of value matters greatly within turbulent conditions.

And for individuals supporting families abroad or businesses importing production inputs, the financial scheduling gymnastics spurred by inefficient global payment rails result in higher costs for end-users. Whether felt directly or indirectly, these fees incurred by delayed settlements and currency conversions bleed heavily into local economies.

That’s why stablecoins are taking off across the region. As Maurice stated, “Access to stablecoins, especially in places with harder local currency access, has become very helpful. Consequently, Bitcoin and stablecoins are widely utilised in such areas.”

Aligning Technological Progress with Inclusion

Indeed, Africa appears ripe to lead digital finance innovation – unlike previous technological realms wherein the continent lagged years behind. But this progress won’t reach its potential without holistic inclusion beyond the fortunate few.

Companies like Yellow Card and TBD seem attuned to this imperative, striving not just for their own commercial success but also for developing more equitable communities. As open source philosophies advance and decentralisation principles take hold, perhaps network effects can compound across Africa’s vibrant entrepreneurial landscape and beyond.

“Our infrastructure provides open participation similar to the early Internet,” Chiu conveyed. “We envision an identity and value-layer as public goods, allowing anyone, anywhere to create long-term structural change rather than just payments companies.”

Whether this proves overly optimistic is debatable. History shows technology alone cannot remedy complex social issues overnight. But there’s undeniable promise in decentralised tools benefitting users directly rather than merely enriching powerful gatekeepers in the global financial hierarchy.

Paired with regional leaders like Yellow Card acquainted with local nuances, TBD’s borderless and permissionless infrastructure offers technological capabilities more attuned to fostering broad social empowerment – not just efficiency for the mainstream alone.

If these tools continue advancing to democratise economic participation for Africa’s diverse populace and business community, the impacts on development and human welfare could be profound.

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