![]() ![]() ![]() These assets are difficult to liquidate in emergencies, and hoarding cash makes people more vulnerable to inflation. In fact, much of the world has no access to savings accounts, meaning that if villagers or farmers are fortunate enough to have any savings at all, it’s often in the form of physical assets, such as cattle. While the banking system has met that aim, its complexity and high operating costs have only allowed them to do so with barriers to entry that leave many behind. Traditionally, banks have functioned as an intermediary between people with financial surplus or shortage of money, earning the spread of the transaction (the difference between the interest rate that a bank charges a borrower and the interest rate a bank pays a depositor). Screenshots of Xcapit’s mobile application show the total balance of the crypto wallet, the user’s assets, the total amount invested and earned. With instant, cheap, traceable transactions that can hold multiple currencies, in multiple mobile networks both nationally and internationally, blockchain applications are becoming an attractive technology to use for remittances, especially for small money transfers. This means that the only additional fee associated with international transfers is the currency conversion. While mobile money was built as a domestic option, Leaf and Kotani Pay operate on a borderless, decentralized application. The United Nations has determined that in order to reduce global inequality by 2030, we need to reduce the cost of international remittances to less than 3 percent. As obvious as these numbers may seem to anyone in a developed country operating with apps like Venmo, access remains a pressing issue in low-income countries. They provide the same benefits to a user as mobile money, to which they add a secure peer-to-peer transaction interface that operates at lower fees (free to operate and below 2 percent to cash out) and lower transaction time (3-5 seconds). Users have transferred more than $400,000 accumulated dollars to date, and the average transfer from person to person is $1.īoth Leaf and Kotani Pay are using blockchain to enable more efficient money transfers. As of October 2021, a total of 2,598 users (based in Kenya, Uganda, and Rwanda) completed 137,195 transactions. We also invested in a similar Kenya-based project, called Kotani Pay, which lets Kenyans dial a short code on their phone (even if it’s a low-end mobile) to send and receive cryptocurrencies, and then to convert it to Kenyan shillings. Many of the users are Rwandan refugees from DR Congo-now able to receive funds from families in other countries-and others are using Leaf to buy things like food and vegetables. The average transfer from person to person is $4.97, an amount that would incur punishing fees with traditional money transmitters. As of October 2021, a total of 5,871 users (based in Kenya, Uganda, and Rwanda) completed 97,819 transactions. One project UNICEF has invested in is Leaf, which is based in Rwanda and allows people to send and receive money directly from their phone, even if it’s not a smartphone. A study from the Innovations for Poverty Action, for example, found that when a Kenyan mobile money service expanded its reach, “an estimated 185,000 women changed occupations, and 194,000 households, primarily female-headed households, were lifted above the poverty line.” But mobile payments have room for improvement in the quest to financially include more people.Ĭhance Uwamahoro, Leaf’s engagement specialist, shows a refugee community in western Rwanda how the Leaf application works. Over the last decade, mobile payments showed big progress to this end. The 1.7 billion people who are unbanked not only have a harder time sending and receiving money, but also often lack the means (such as a passport, proof of income, reliable Internet, and a smartphone) to open an account. Hefty fees are a problem, and so is access. This might be a minor nuisance for a wealthy New Yorker, but for someone living in Kenya, that could mean a child goes to bed hungry. Western Union can charge up to 35 percent for transfers of less than $10. Four Ways to Use Blockchain for Financial Inclusionġ. ![]()
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