Crypto can boost economic welfare in underbanked regions | Opinion

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As a seasoned fintech professional with a rich background in driving growth and innovation in emerging markets, I wholeheartedly believe that cryptocurrencies are poised to revolutionize the financial landscape, particularly in underbanked regions. My journey, spanning collaborations with industry titans like Samsung and Diebold Nixdorf, has equipped me with the strategic acumen to recognize the immense potential of this transformative technology.

Despite the rapid advancement of global economies, financial exclusion continues to be a long-standing challenge. According to a 2022 report by Visa, approximately 2.1 billion people worldwide are either completely overlooked or underserved when it comes to digital financial services. This void often leaves individuals and businesses in underbanked areas stuck in a cycle of restricted growth and diminished opportunities.

The good news? Emerging technologies, especially cryptocurrencies, present an opportunity to rewrite this narrative. Merchant adoption of crypto payments has the potential to significantly uplift the welfare of these underbanked economies.

Inflation is crippling cash

In economies where inflation and price fluctuations are high, such as Argentina, Venezuela, and Zimbabwe, it becomes increasingly challenging to depend on traditional cash. The value of local currencies has depreciated so significantly that everyday financial transactions can be filled with complications and inefficiencies.

In simple terms, digital currencies like Tether (USDT), USDC (USDC), Bitcoin (BTC), and others can provide a solution in various situations. By facilitating secure, person-to-person transactions without the need for unpredictable local currencies, cryptocurrencies offer businesses a way to safeguard their financial worth. Compared to traditional money that may suffer from inflation, crypto payments are more resistant. This is particularly beneficial in areas where central banks find it challenging to maintain economic balance.

The change has become noticeable. A survey conducted by Deloitte in 2022 found that 93% of merchants dealing with cryptocurrency have seen a boost in customer interaction and satisfaction levels. As more businesses understand that crypto facilitates smoother transactions, consumer confidence increases. Over time, this leads to a more enduring level of economic activity.

Crypto payments: An interconnected future for merchants and cross-border transactions

The increasing use of cryptocurrencies by merchants is fostering growth across borders as well. Cryptocurrencies offer lower costs and quicker transactions compared to conventional banking systems based on SWIFT, making traditional methods look increasingly outdated. Particularly small businesses can benefit from crypto payments by avoiding excessive charges and reducing the risk of fluctuating exchange rates.

Moreover, decentralized digital currencies offer transparency in financial exchanges, reducing the risk of corruption significantly. This aspect is crucial for maintaining economic stability in less affluent communities. Over time, the adoption of cryptocurrency tends to stimulate local trade, a development that inevitably and positively influences the overall economy.

Micropayments: A game-changer for financial inclusion

Embracing cryptocurrencies can offer a largely unexplored chance to boost financial accessibility, particularly in areas with limited banking options. In these regions where daily earnings might only amount to a few dollars, traditional banking fees make small transactions unfeasible. Cryptocurrencies, on the other hand, facilitate effortless micropayments at minimal costs, paving the way for a new era of commerce.

In rapidly advancing and growing economies, businesses cater to a segment of the populace that is both under-served by traditional banking systems yet boasts a high proportion of tech-savvy youth. This unique situation offers a fertile ground for the introduction of cutting-edge payment methods. Although mobile money has made significant strides in addressing financial disparities, cryptocurrencies promise an even more potent and convenient solution.

As a crypto investor, I can personally attest that the world of digital currencies provides unparalleled opportunities for businesses to cater to diverse markets in an unprecedented manner. With their inherent accessibility, reduced transaction fees, and borderless functionalities, cryptocurrencies empower companies to deliver smooth, dependable, and inclusive financial solutions without geographical constraints.

Key considerations for payment solution providers

While the promise of crypto is undeniable, it’s not a one-size-fits-all solution. It’s crucial that payment providers address several key factors when developing systems tailored to underbanked regions. 

Initially, it’s crucial that solutions are created with inclusivity as a priority. This is because a significant number of people are without access to advanced technology, such as high-end smartphones. Therefore, these systems should operate smoothly on basic smartphones or even simpler feature phones. The user interfaces need to be self-explanatory to foster widespread acceptance and usage.

Connecting with this is the importance of providing enough understanding through educational materials. Cryptocurrencies might appear confusing for beginners. It’s crucial that payment providers invest time and resources into educating not only customers but also merchants about how cryptocurrencies function, how they can take advantage of their advantages, and how to handle associated risks effectively. Financial literacy campaigns will be essential in fostering trust and encouraging widespread acceptance from both businesses and consumers.

As an analyst, I’d express it as follows: Navigating regulatory compliance requires meticulous attention. Working in underbanked regions can be intricate, given the complexities surrounding this matter. To succeed, we must foster collaborative relationships with governments, ensuring our operations are compliant while simultaneously advocating for transparent, favorable policies that nurture innovation. Above all, prioritizing security is crucial. We must invest in strong fraud prevention mechanisms to prevent cyber-attacks and the apprehension they spark among new users. This fear can significantly slow down adoption and erode any trust we aim to build.

Final thoughts

Incorporating cryptocurrencies within the business networks of underserved areas isn’t merely about technology advancement; it presents a chance to boost local economies and promote equality by providing access.

Cryptocurrencies could prove to be powerful tools for leveling the global financial landscape, as they address weaknesses found in traditional payment methods. This allows businesses to transact globally more efficiently, and individuals to steer clear of the pitfalls associated with being overly reliant on physical cash.

Indeed, it’s crucial that local communities, administrations, and digital payment service providers work together for optimal success. The widespread use of cryptocurrency transactions could significantly boost financial accessibility worldwide, outgrowing its niche reputation when implemented thoughtfully.

Meryem Habibi

Meryem Habibi serves as the Chief Revenue Officer for Bitpace, leveraging a rich background in marketing, communications, and sales within the fintech sector. Her extensive work history includes collaborations with prominent companies like Samsung and Diebold Nixdorf, where she contributed to strategic planning, revenue expansion, risk management, and tapping into opportunities in developing markets at executive levels. Meryem is deeply committed to providing intuitive and efficient products for an ever-evolving and cutting-edge industry. Her contributions significantly impact Bitpace’s journey towards innovation and achievement.

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2024-12-17 15:22