5 Reasons Why African SMEs Should Consider Crypto Payments
Monthly cryptocurrency transfers of less than $10,000 to and from Africa increased by over 55 percent to $316 million in June 2020. Small Bitcoin transfers summed up to over $56 million in Nigeria, with over 120,000 transactions recorded. Nigeria, the continent’s largest economy, South Africa, and Kenya saw a lot of action during this time.
Since being introduced as a payment tool over ten years ago, Bitcoin has increasingly grown in popularity and use cases.
But is cryptocurrency right for African SMEs? We explore 5 reasons why business owners should consider integrating crypto payment gateways for their businesses.
For the uninitiated, Binance Pay is a contactless, borderless and secure cryptocurrency payment technology that allows anyone to pay and get paid in crypto. Make your business crypto-friendly and start accepting Bitcoin and other popular cryptos for offline and online sales.
What is cryptocurrency?
A cryptocurrency is a form of virtual money used to buy items and send money to other people the same way that regular money can. The ‘crypto’ in cryptocurrency refers to the complex encrypted codes or cryptography employed to produce and track transactions.
The big idea of crypto is to eliminate the intermediaries like credit card companies and banks and create an alternative for cheaper money transfers between virtual wallets. And because no central authority regulates cryptocurrencies, they are protected from government interference.
Bitcoin was founded in 2008 by an unknown person (or group of persons) with the pseudonym Satoshi Nakamoto. It is by far the most popular kind of cryptocurrency. There are also over 6,000 different cryptocurrencies, including Ethereum, which is a cryptocurrency gaining traction throughout Africa.
Most Africans still consider cryptocurrency to be “internet money.” Well, cryptocurrency essentially takes what money is to many people and utilizes technology to make it more transparent and less centralized.
Why is there so much crypto potential in Africa?
Certain factors and conditions make the adoption of crypto payments for SMEs in Africa possible, including:
Current use of virtual money
Cryptocurrency works just like mobile money, and since Africans already use it, they are more likely to access and appreciate crypto payments. Many Africans are already familiar with M-Pesa, a mobile money transfer service in Kenya, Wave, and OPay.
Africa is in an excellent position to benefit from the Bitcoin bang, as it is home to an increasing number of flexible, young professionals and aspiring entrepreneurs in countries with significant unemployment percentages.
So, most young people who have not secured an employment spot in established sectors are constantly searching for new sources of income like cryptocurrency.
People can now use the cryptocurrency system to build their businesses, work for large corporations outside their country, and earn a living.
Cushion for currency instability
To brace for hyperinflation, more Zimbabweans are investing in cryptocurrencies.
Africans now have a substitute for regular government-managed currencies, with a long history of blunders and severe consequences.
Cryptocurrency can revolutionize remittances
Africans in foreign countries can also leverage the cryptocurrency feature to send remittances more cheaply across borders.
It is a sensible move, as bank transfers are too expensive for Africans in the diaspora sending money home. It is often up to 20% in some cases. However, several cryptocurrencies allow people to send money back to Africa with little or no extra charges.
BitPesa, a remittance provider established in Nairobi, is one of the most popular services. It accepts Bitcoin as a payment method for international transactions, saving you money by avoiding bank fees and the expense of currency conversion.
Why African SMEs Should Consider Crypto Payments
Almost three-quarters of businesses surveyed worldwide reported that accepting new forms of payments is “fundamental” to their business growth. For many smaller companies moving into new forms of digital payments, adopting crypto may be the additional push to become bigger brands.
But if you are still wondering why African SMEs should consider crypto payments, let us look at some reasons.
Bitcoin users have complete control over their funds and transactions
Traditional fiat currencies are susceptible to several limitations and dangers. Banks, for example, are prone to economic booms and busts - scenarios that can sometimes result in bank runs and crashes. So, you do not have complete control over your funds.
However, crypto guarantees user autonomy, at least in theory, since its price is unrelated to specific government actions. This means that bitcoin users and owners have complete control over their funds.
Also, blockchain transactions are irreversible and cannot be changed by a third party, like a government or financial services organization. It is also impossible to file a chargeback for Bitcoin given to a third party.
Ultimately, the only way to reverse Bitcoin transactions is for the recipient to send back the original Bitcoin value.
Transactions in Bitcoin are pseudonymous
Many online businesses require a lot of data to identify the people in a transaction. So, if you want to make a payment, it can only be possible when you and the recipient’s identifying information has been validated.
Although the verification procedure helps discourage fraud, it also puts a go-between to regulate the distribution of services to specific parties.
But transactions in cryptocurrency are pseudonymous. Though this does not make the transactions fully anonymous, they can only be traced back to a blockchain address.
Peer-to-peer transactions are the foundation of Bitcoin
Bitcoin is a peer-to-peer payment system, which means that you can send and receive payments from anyone on the network anywhere in the world.
The parties involved in a transaction do not need authorization from an external source or authority unless they are sending or receiving crypto via a licensed exchange or institution.
Free of banking costs and cheap international transaction fees
While typical banking fees like the occasional deposit, withdrawal, and maintenance fees are standard among fiat currency exchanges, crypto transactions do not require traditional banking expenses associated with fiat currencies.
Fees and currency expenses are common in standard wire transfers and international transactions. The costs of transacting with Bitcoin are often cheaper than bank transfers because there are no middlemen or governments involved.
This is a significant benefit for SMEs, especially since crypto payments are quick, without the bother of traditional authorization formalities and wait times.
Bitcoin transactions are entirely safe
Because cryptocurrency isn’t a physical currency, robbers will be unable to steal it from a user. Even hackers can’t steal your cryptocurrency without the wallet’s private keys.
While there have been instances of cryptocurrency exchange hacks, the Binance exchange has remained unaffected. So, transactions carried out between two (or more) addresses are safe as long as you use a trusted exchange platform.
You can also make and receive crypto payments anywhere with internet access and the Binance app. This eliminates the need for customers to visit a bank or a store to purchase your goods.
Thanks to blockchain and other technologies, merchants have started accepting crypto payments to provide more payment options for their customers.
Don’t miss out on the digital shift; begin the journey towards accepting Bitcoin and other cryptocurrencies as payment. Find out how to leverage Binance Pay to automate and grow your business.
You can also access millions of potential customers worldwide and instantly accept crypto payments when you sign up as a Merchant on Binance Pay.