Payments collected annually by micro, small, and medium-sized enterprises (MSMEs) worldwide exceed $19 trillion. This makes for a well of opportunity to build virtual currency infrastructure to channel the wealth in the virtual asset segment.
Payments solution is one reason cryptocurrency can play a critical role. This is especially true in regions with large unbanked populations. Africa is already warming up to crypto as an investment instrument. Payment solutions could be the next possible department for crypto to disrupt.
Speaking in Numerals
MSMEs are leading providers of goods and services to consumers. They are also economically significant, generating employment in the range of 60% and 70% of the global population. There are around 100 million MSMEs in Africa, with 42 million in Nigeria alone. Consumer payments on the continent are predicted to top $2.1 trillion by 2025. Since only about 5% of these transactions are currently digitized, banks, Fintech firms, mobile money operators are building innovative solutions to capture this payment opportunity.
The question that arises, in this case, is – which entity will solve the fundamental challenges small businesses have with payments on the continent? Adding to this is the inflation factor that perennially plagues the region.
Financial institutions and regulators have incentivized digitization of transactions as it costs countries up to 1.5% of GDP to print, distribute and replace currency notes annually. Despite that, the digital infrastructure required to make cashless work is often unstable. At the point of sale, paying with cash is often the easier choice for consumers. Paying with cash is a habitual hazard. Although expensive, it comes with a set of conveniences. It is accepted everywhere, does not require equipment to process, and is generally a faster transaction than other forms of payment.
However, digitization of transactions requires the installation of specialized hardware and needs training of personnel to handle the equipment. It also needs people to trust the system. This solution should fail if the number of unbanked people is taken into account.
Virtual currency format on the other hand requires knowledge and an infrastructure incurring several times the higher costs. Yet, it can be a powerful instrument for people to use to combat chronic inflation.
Payment solutions must be better and more convincing than cash, with benefits so attractive that merchants are willing to pay for them. Small and medium-sized enterprises often encounter business intelligence challenges in the departments of accounting, sales tracking, and forecasting. They seek to strengthen and manage customer relationships with CRM solutions, store credit, and promotions and they struggle with raising working capital and value chain financing while managing inventory.
Most of these issues can be resolved with a blockchain-powered system that uses a digital asset to transact and offer loyalty benefits. And it fully bypasses the expensive and bureaucratic financial institutions.
HashCash Payment Solutions
There are several reasons to accommodate crypto as a parallel payment processing unit. Crypto payment processing is accepted globally. It can make local businesses global. There is support and advocacy for cryptocurrency in the region, and the young Africans are in favor of the re-institutionalization of the finance sector with crypto as an alternative.
Global blockchain development company HashCash Consultants have played an important role in boosting the crypto-industry in the MENA region. The cryptocurrency exchange solution provider has been involved in several payment processing projects in the region. Billbitcoins by HashCash is a crypto payment processor employed globally by institutional crypto enterprises and financial institutions.
Given the soft ground and opportunity, global investors and enterprises may be already running trials in the region. This may or may not be coincidental with the sharp and sudden rise in crypto ventures in UAE and the MENA region.