Thirty African Markets, One Stablecoin, and a New Payments Reality

In Africa’s fintech and payment systems, we experienced slow cross-border settlement systems, which were expensive. Traditional correspondent banking demanded multi-day clearing times and ate into margins with double-digit fees.

However, stablecoins have taken the lead in international global payments, supported by Visa and Mastercard. Local fintech startups have found a unique way to incorporate both card systems with stablecoin access. As a result, Africa has become a part of Visa’s $20 billion revenue stream through its stablecoin division.

Africa’s Financial Plumbing Gets an Upgrade

Stablecoins account for 43% of Africa’s total crypto market, so expanding their use became a goal for many local startups. For instance, Onafriq, Mpesa Africa, and Visa are piloting cross-border mobile money systems in the Democratic Republic of Congo. Think of it as the better of all worlds. Now, locals have access to USD-pegged tokens, an international network, and the ability to make purchases directly from their phones.

What would take days now ends in minutes. Similarly, having access to USD-backed stablecoins enables a direct way of combating inflation, while local stablecoins like CNGN and ZARP enable easy swaps between local and international currencies.

Yellow Card is by far Africa’s leading stablecoin provider. The local platform recently transitioned from an exchange to a B2B utility, ensuring that 99% of its volume is in stablecoin. Many experts attribute this shift to its recent collaboration with Visa. The partnership ensured Yellow Card had access to Visa’s settlement rails to manage treasury and hold liquidity. This drastically reduces foreign exchange risk and transaction lag.

Together these platforms are building a parallel financial plumbing system that operates outside the constraints of traditional banking hours.

The Credit Crunch Meets Its Match

Visa has steadily pushed the incorporation of virtual and physical cards in Africa. Local platforms like Credit Coop, an on-chain lending infrastructure partnered with Visa to overhaul its credit system. As per the announcement, Visa will combine its settlement data with Coop’s smart contract systems, which will route daily Visa settlement files automatically, promoting the repayment process.

In addition, Visa was also behind Kredete’s stablecoin-backed credit card. Users will have access to USDC, and they can access working capital at borrowing costs reduced by up to 30%. Since 2023, this specific on-chain credit model has facilitated over $2.5 billion in cumulative financed settlement volume with zero reported defaults. It allows fintechs to scale credit products across 41+ African countries without needing traditional, expensive warehouse facilities.

Visa is banking on stablecoins, and its results are all too convincing. Its stablecoin settlement run rate recently surpassed a $20 billion annualized pace. That’s a 15x year-over-year increase, and its payment volume on stablecoin-linked programs has nearly doubled.

Stablecoins in Africa have taken root, with many going as far as developing locally backed stablecoins. CNGN and ZARP function differently from USDC. Its primary function is to deal with FX exchanges. Instead of swapping bitcoin to USDC and then finding an app that can convert it to a local currency, using local stablecoins only requires a simple click of a button. The only flaw is that it is limited to the existing stablecoins. So far only Kenya, Nigeria, and South Africa have some form of locally acknowledged stablecoin.

Furthermore, regulation is also an aspect to consider. As a continent, our regulatory fragmentation is one of the few demerits we have.

The new Virtual Asset Service Providers Act in Kenya, for example, imposes stringent capital requirements on stablecoin issuers. In South Africa, the central bank has pushed back against using foreign-currency tokens for domestic payments to prevent dollarization. Meanwhile, Nigeria’s SEC is requiring foreign issuers to establish local presences and meet stringent registration fees.

Currently, local fintech and exchanges that are making real change and have value are those with the deepest local regulatory relationships and the most seamless integration into existing mobile money ecosystems.

The New Baseline

Stablecoin payments are currently the new wave of innovation. Now fintechs, banks, global payment systems, and startups are finding ways to use stablecoins in everyday commerce, remittances, and credit.

Everyone now is shifting; the best way to stay ahead is to ensure that regulation, speed, efficiency, and understanding the local market are the organization’s main focus