Blockchain technology and the ownership and use of cryptocurrency are increasingly becoming popular as the benefits and advantages become clearer. The transparency and immutable nature of the Blockchain has attracted individuals, organizations, and governments that desire these traits for their systems and products.
As more dApps are being developed on various Blockchain platforms, users are increasingly adopting and using cryptocurrencies to interact with these dApps. However, getting users to move their assets from fiat to crypto and vice versa is generally not a simple process. With various dApps having more and more users from the African continent, the problem of how these users off-ramp into fiat is one that has to be well thought out to ensure the success of any dApp.
This article offers a simple way to think about the off-ramp process and offers insights into how to select a reliable off-ramp partner in Africa.
For a start, consider that Blockchain applications are internet dependent, making the primary mode of interaction with dApps to be web or application-based. Most solutions for off-ramping from crypto to fiat are therefore more likely to be web-based. While this approach works well in many developed countries, it is important to note that the primary interface of interaction for users on the African continent on their phones is Unstructured Supplementary Service Data (USSD).
USSD is a communication protocol that utilizes codes made up of the characters available on a mobile phone. When you dial a number that starts with * and ends with #, you are using USSD. USSD is currently the best available communications technology to deliver mobile financial services in low and middle-income countries because the majority of large scale mobile financial services in the developing world use USSD as their primary mechanism for communication between customers and their mobile payments platform.
Secondly, consider the way in which users receive funds in fiat currency. Some users receive their funds through PayPal accounts, from which they transfer funds to their bank accounts for subsequent withdrawal. The weakness with this process is that many workers on gig platforms may not even own a bank account. According to the World Bank, 350 Million people in Sub-Saharan Africa are unbanked. A second alternative off-ramp solution is sending users crypto assets which they can swap on Local Crypto. However, this also requires in-depth knowledge of cryptocurrency transaction. A third and more practical solution is to create a path of payment that connects to their mobile money provider.
Mobile money is a technology that allows people to receive, store and spend money using a mobile phone. It’s sometimes referred to as a ‘mobile wallet’. According to GSMA, mobile money in Africa has overshadowed banking, with there being about ten times the number of mobile money agents than there are bank branches. Mobile money is provided by mobile network operators, and the coverage is so wide that even those in remote areas can access these financial services. Any dApp looking to serve the African market should therefore strongly consider integrating to the mobile money network.
Finally, dApps should consider the regulatory framework in the countries they opt to serve. They should consider whether the off-ramp platform they choose is connected to other legally recognized service providers, and whether it does background checks on users on the platform. This ensures that a dApp does not get caught in the middle of regulatory setbacks due to lack of due diligence. By selecting a solid partner, the dApp does not have to worry about going through the legal hurdles.
We hope that these insights make it easier for dApps to select an off-ramp partner that is reliable that offers stability in serving the African market.