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).
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.
What are your thoughts on this story? Tell us what you think in the comments section below.
Image Source: Shutterstock, Pixabay, Wikimedia Commons
Disclaimer: This article is for reference only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. The company or the author shall not bear direct or indirect responsibility for any damage or loss caused or claimed to be caused by using or relying on any content, goods or services mentioned in this article.