Cash transfers in Africa
Friday, June 13, 2014
THE affluent Midrand area of Johannesburg is about to make history. By the end of June a local company, ZABitcoinATM, hopes to install Africa’s first Bitcoin ATM. The machine will allow clients to insert local cash and change it into the crypto-currency minted on the internet, to be used at nearby businesses which have joined the scheme.
Up to 80% of African adults have no bank account, but at least 16% use mobile-money platforms. The continent annually receives $50 billion in remittances, which are subject to fees of up to 12% charged by wiring services like Western Union. If one could improve internet access and provide immediate conversion into local currencies, entrepreneurs speculate that Bitcoin might be able to undercut remittance services. Zach Harvey, the chief executive of Lamassu, the ATM’s manufacturer, could train his sights on companies like Western Union.
But first he will have to overcome a number of hurdles. Bitcoin’s remittance pioneers face the same anti-money-laundering and cash security issues that drive ordinary transfer fees so high. Then there’s the unknown of local governments’ reactions to such little-regulated exchanges.
According to Marcus Swanepoel, owner of the regional BitX exchange, the most immediate opportunity may be Bitcoin’s facilitation of cardless e-commerce. ATMs ease the casual consumer’s access to small sums for use online and off. It may be some time before Bitcoin ATMs and similar innovations reach the unbanked. But they have come a step closer to entering the formal economy.