African fintech startup Chipper Cash has expanded its peer-to-peer instant money service to South Africa. In addition to being able to use remittance services, South African users can also buy, sell and transfer cryptocurrencies such as Bitcoin, Ethereum and USDC stablecoins.

Disruption and innovation in South Africa have matured

According to a report by Pardon Mujakachi, the start-up’s vice president of strategy and partnerships in Africa, Chipper Cash entered South Africa because it believes that the country is “ripe to disrupt and innovate the financial services market.”

The report also quoted the vice president as saying that “it takes three days for an American to send money to South Africa”. On the other hand, it takes up to 48 hours to transfer funds from one bank to another.

Mujakachi believes that it is this inefficiency that often drives users to use informal channels. VP also shared the estimated number of users forced to use such informal channels. He said:

People will eventually use informal channels to send money. If you look at outbound remittances from South Africa, 68% are made through informal channels. Even for domestic remittances, a considerable amount is made through informal channels.

According to the vice president of Chipper Cash, this kind of domestic remittance will be the starting point for the fintech company in South Africa. However, only authenticated users can use this application.

Dominance of traditional remittance organizations

Like other fintech start-ups before it, Chipper Cash is trying to capture a significant portion of the cross-border remittance market share from mature money transfer organizations (MTOs).

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By providing lower transaction costs, Chipper Cash may eat into the market share of existing MTOs. However, it remains to be seen whether this mobile application will win over economically excluded groups in South Africa. This is because in addition to the lack of required verification documents, some of these financially excluded groups cannot access the equipment required to use the mobile application.

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