Crypto solutions meeting competing needs

Elsewhere in this blog I have consistently highlighted problems and challenges that slow crypto-currencies adoption. Regulatory concerns loom large in many cases, the threats against and lack of endorsement of crypto-currencies, mean regular businesses will find it difficult to incorporate these alternative currencies into their payments systems.

The unbanked, particularly those in the developing world, will be unwilling to adopt alternative currencies, if this limits their choices or if they cannot pay for essential services using such currencies. In some African countries, financial institutions have instructions not to extend banking services to crypto-currency exchanges.

This marginalization of crypto-currencies partly obscures their true value and potential impact on communities. Of course the aim is to slow down a mass movement towards cryptos, staying the execution so to speak.

Nevertheless, the same hurdles are playing a part in encouraging entrepreneurs to develop new and innovative solutions. Such solutions attempt to satisfy the sometimes competing needs of ordinary people and those of regulating authorities.

Meeting the needs

Ordinary people on the African continent want a stable currency that is recognized globally, to enable fast and secure cross border payments. Governments are more concerned with conserving scarce foreign currency reserve and money laundering issues.

Consequently innovative solutions meeting some of these conditions are emerging with some seemingly having struck the right chord.

A Singapore head-quartered technology firm, Pundi X Labs has developed a user-friendly Blockchain based solution for digitalization of any over-the-counter retail transactions, courtesy of their XPOS terminal. According to Melcom Copeland, Pundi X Business Development Director, EMEAR, this terminal enables merchants and customers to conduct crypto-currency transactions using fiat currency, and their proprietary mobile X Wallet and XPASS cards.

“What Pundi X has done is to take out the complexity and mystery of conducting crypto-currency transactions by emulating today’s current over-the counter payment processing in order to forge crypto mass adoption”, says Copeland

Potential implications for crypto adoption

Pundi X’s unique solution appears to be one of the early successes in attempts to integrate crypto-currency with the fiat currency dominated financial system.

This solution has important implications for the prospects of crypto currencies in general, because it has the potential to draw people who are attracted to cryptos, but are denied the opportunity to purchase these, often by decrees or subtle disapproval by regulators. 

This ability to top-up or draw down crypto-currencies is one quintessential attribute of the XPOS, which makes it a potential game changer in the fight to achieve mass adoption. With the XPOS, once you acquire crypto-currencies, there is no longer a sense or a feeling of being ‘trapped.’ This is because the solution enables users to either increase or decrease cryptos as well as the ability to perform everyday transactions using crypto-currency.

It is possible that when this is done consistently over a long period, some of the popular misconceptions about crypto-currencies will dissipate and more people will embrace the technology.

Pundi X says these terminal are configured to accept the most popular crypto-currencies including Bitcoin, Ethereum, Binance BNB, and their own NPXS. In addition, the Pundi X ecosystem can also list and integrate other ERC-20 based tokens and wallets on a case by case basis.

Buttressing financial inclusion 

The compatibility of the XPOS with mobile wallets makes this innovative solution potentially appealing to the unbanked population across the African continent. The World Bank conducted the Global Findex Database research in 2017 which measured financial inclusion and the fintech revolution. In its findings, the World Bank discovered that Sub- Saharan Africa is the only region where the share of adults with a mobile money account exceeds 10 percent. 

The number has been increasing exponentially since 2014 as those who could not previously access banking services joined mobile money platforms. According to the Global Findex database, in 2014, Kenya had more than 40% of the adult population with a mobile money account, the highest number on the continent then.

However, by 2017, four more countries namely, Namibia, Gabon, Uganda and Zimbabwe had passed the same 40% threshold and the continent’s trajectory suggests more countries will join this club. A mobile money account is the first important step of financial inclusion but it has limitations. For instance, cross border payments are often not possible without pre-arrangements with financial institutions. One would have to physically visit the bank, to facilitate any such transaction.

Secondly mobile money accounts are often subject to draconian limits imposed by some central banks. In other words, you cannot make purchases that exceed the set daily limit, even when you are running a legitimate business that demands bigger funds. Apparently these limits are set by bureaucrats with limited knowledge business activities in the informal sector, where many mobile money account holders trade.

The Pundi X solution potentially solves this problem as it can also be configured to accept traditional mobile wallets, in addition to crypto-currency wallets. This means the previously unbanked can now transfer funds into such wallets, which are recognized globally and make payments beyond national borders. This is all done without having to visit a physical building of a bank.

With such features, it will be difficult to stop or slowdown the crypto-currency movement as evidenced by the belated but reluctant admission by some regulatory bodies on the African continent.

Governments and regulators should by now realize, that if they had taken a more embracing approach, it is possible they could have been in a position to influence growth of the market in ways that addresses their concerns.

Nevertheless, there is still a small window for such co-operation and as such, governments and regulators should work with entrepreneurs to bolster or create alternatives, which are acceptable to all but without violating some of the core tenets of crypto-currencies.