Some have predicted that cryptocurrency would first flourish in third-world nations plagued by severe inflation and limited banking access. This prediction appears to be turning into reality. African cross-border payments startup Chipper Cash, after securing $30 million in Series B funding, has now launched support for cryptocurrency transactions.
Chipper Cash recently closed its Series B funding round. Reports from Tech Crunch revealed a notable participant in this round: Bezos Expeditions, the investment fund managed by Amazon founder Jeff Bezos.
Bezos's investment in Chipper Cash is not surprising when examining the company's rapid growth and potential. Founded in 2018, Chipper Cash offers peer-to-peer (P2P) payment services across seven African countries and regions, including Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, and Kenya. Its key value propositions are zero-fee transactions and highly competitive cross-border exchange rates.
Within just two years, the platform has amassed over 3 million users. It processes an average of 80,000 transactions daily. According to data provided by CEO Ham Serunjogi, Chipper Cash reached a monthly transaction volume of $100 million as of June 2020.
Expanding Services: Introduction of Cryptocurrency Trading
After raising a total of $30 million in funding, Chipper Cash has expanded its service offerings to include cryptocurrency trading. Additionally, it now provides a feature allowing users to invest in U.S. stocks.
Serunjogi stated to Tech Crunch:
"In terms of product development, we needed to enhance our payment solutions. This includes integrating cryptocurrency services and also enabling the ability to buy U.S. stocks."
Electronic payments are remarkably widespread across Africa, especially when compared to many Western nations. However, this adoption isn't necessarily a sign of advanced financial infrastructure. According to World Bank statistics, among the billion people living in Sub-Saharan Africa, only about 34% possess a formal bank account. This significant unbanked population has driven the popularity of digital payment solutions as essential tools for basic financial activities like storing value and transferring money.
Adding cryptocurrency services on top of this existing digital payment framework is a logical progression. In economies with high volatility, digital assets can offer an alternative.
For instance, between 2003 and 2017, the Ugandan Shilling lost 100% of its value. Even more extreme is the case of Zimbabwe, which experienced hyperinflation reaching a staggering 79.6 billion percent. Such extreme economic instability is a recurring challenge in several African nations. Consequently, cryptocurrencies are gaining traction, both as a potential high-risk, high-reward investment and as a hedge against rapid local currency devaluation.
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Understanding the African Fintech Landscape
The rapid growth of companies like Chipper Cash highlights a broader transformation happening within Africa's financial sector. Traditional banking has often failed to reach large segments of the population due to various barriers, including physical distance to branches, lack of necessary documentation, and affordability.
Mobile-based fintech solutions have leaped over these hurdles. By leveraging widespread mobile phone penetration, even without smartphones, these platforms have created new financial ecosystems. They empower users to send money to family, pay for goods and services, and save funds securely—all from a basic mobile device.
Chipper Cash operates within this vibrant ecosystem. Its focus on cross-border payments addresses a critical need for a continent with numerous countries and currencies, where sending money across borders through traditional channels has historically been slow and expensive.
The Role of Cryptocurrency in Emerging Economies
The decision to integrate cryptocurrency trading is strategic. For users in countries with unstable national currencies, cryptocurrencies like Bitcoin or stablecoins pegged to the US dollar can offer a more stable store of value. This protects savings from being eroded by hyperinflation.
Furthermore, cryptocurrencies can facilitate cheaper and faster international remittances. The traditional remittance industry is often criticized for its high fees, which disproportionately affect low-income workers sending money home. Crypto-based transfers can potentially streamline this process, reducing costs and transfer times significantly.
Frequently Asked Questions
What is Chipper Cash?
Chipper Cash is a financial technology company that provides a mobile application for free peer-to-peer payments and cross-border money transfers within Africa. It has recently expanded its services to include cryptocurrency trading and access to U.S. stock markets.
Which countries does Chipper Cash operate in?
The platform is currently available in several African nations, including Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, and Kenya. The company is focused on expanding its reach within the continent.
Why did Chipper Cash add cryptocurrency services?
The addition was driven by user demand and market conditions. Many African economies experience high inflation and currency volatility. Cryptocurrencies can serve as an alternative investment and a more stable store of value for users in these regions.
Is it safe to use Chipper Cash for crypto trading?
As a regulated fintech company that has secured significant venture funding, Chipper Cash employs standard security measures. However, as with any platform dealing with cryptocurrencies, users should be aware of the inherent volatility and risks associated with digital asset markets.
How does Chipper Cash make money if transactions are free?
While core P2P transfers are free, the company generates revenue through other value-added services. These include its new cryptocurrency trading features (likely via spreads or transaction fees), forex exchange on cross-border transfers, and potentially fees associated with its stock trading functionality.
Can users in the U.S. or Europe use Chipper Cash?
Currently, Chipper Cash's primary focus and operational licensing are centered on African markets. Its services are tailored for users within its supported African countries. Individuals outside these regions should check the app's availability and terms of service for their location.