The globalization of our world has been going faster than payments technology, for instance, paying for products and services, either B2B or B2C transactions (business-to-business or business-to-consumer), has been slowed down by the technology. We are still searching thoroughly to identify a method of payment which is efficient.
Payments may lead you anywhere in the world, and in South Africa, one such example is BitPesa, developed by Elizabeth Rossiello, which is a foreign exchange platform that leverages blockchain technology for efficient payments through Africa.
BitPesa, located in Nairobi, London, Lagos and Madrid, offers businesses a faster, and cheaper, method of payment. Its goal is to make cross-border transactions cheaper for Africa, and aims at being the first as of B2B financial inclusion.
Elizabeth Rossiello, started BitPesa as a way of providing liquidity in African currencies, in order to foster growth in regional businesses, and as in 2013, when BitPesa was launched, cryptocurrencies had just started taking off, it leveraged on these means of payments in order to avoid costs and suffer delays, experienced when using other intermediaries. Regarding regulation, a hot topic when talking about crypto-related firms, Elizabeth has stated that BitPesa is the first company, in its kind, to receive full licensing by the FCA, the Financial Conduct Authority, as an authorized payment institution. This lead the company to become more scrupolous when accepting new customers.
BitPesa allows people to exchange African currencies at the best rates, with settlement directly to and from the African Banks and mobile money accounts, indeed, low-cost and easy payments to and from East, Central and West Africa are exercised without the stress and cost of international bank wires and multiple broker trades. It has allowed, throught its network and connections with brokers across the world, to make million-dollar transactions straight to an African bank, thus minimizing the currency risk, and as Elizabeth Rossiello stated: “we are very confident that our users are not engaging in money laundering or tax and capital control evasion, due to our compliance checks and transparent reporting”, indeed, adopting the Blockchain Technology has allowed the BitPesa to be completely transparent on its transactions.
The greatest difficulty for the firm has been, as stated by the founder, raising the fund necessary for the business development. As a female funder based in Africa, the fundraising process has been much arduous, as also in the United States women only receive 2% of venture funding. There are several reasons for which Africa has failed to produce several profitable firms, and as mentioned by Elizabeth Rossiello, the low access to finance is one of the reasons, as Goolam Ballim, the chief economist of South Africa’s Standard Bank stated, “There is a myth out there that every good idea can find funding […] But in Africa that simply isn’t true”. As a matter of fact, the largest portion of African countries, have been channeling the greatest majority of fund into the governemnt, rather than distributing them adequately to entrepreneurs. However, the raising interest, in 2013, for the Blockchain Technology and Cryptocurrencies has allowed BitPesa to captivate a number of investors, such as Panthera, Bitfury and the Digital Blockchain Group. Moreover, BitPesa could be regarded as the pioneer in blockchain in East Africa in 2013, and since the technology has grown rapidly and gain major support, as a higher adoption of cryptocurrencies has started to gain recognition in its application to land deeds, education and, most importantly, healthcare.
BitPesa has been in an ongoing partnership with GBG, a global specialist in Identity Data Intelligence, which has provided to the firm a number of verification services in order to automate customer sign-up process and runs anti-money laundering checks. With this ongoing partnership, BitPesa has been able to continously monitor their client database for any changes in their PEP, sanction, adverse mediabase and disqualified director status. Indeed, the main goal of GBG, has been to provide support to companies and governments to fight fraud and cybercrime.
No matter whether it is cross-border payments or e-commerce payments, what is evident is that technology is quickly making payments more efficient and convenient. We are still far from done in terms of innovation, however, new start-ups, such as BitPesa, are continously emerging and bringing general enthusiasm for these new financial technologies.
by Alessandra Guaitamacchi