Africa’s mobile money embraces blockchain
In 2020, researchers at the University of Zambia (UNZA) proposed a clearing and settlement architecture that would allow interoperability between mobile money payment networks based on a distributed ledger system.
The researchers argued that a payment infrastructure based on a centralized database is ill-suited to the way people use mobile money and creates significant barriers to interoperability between different networks. In response to this problem, they argued for mobilizing blockchain technology to enable mobile money transactions.
Fast forward, MFS Africa, which has created a single interoperable transfer network connecting over 400 million mobile wallets across the continent, appears to be looking to bridge this gap.
American crypto giant Ripple announced earlier this month that it would offer its blockchain-based liquidity solution to the pan-African FinTech as part of efforts to “bring the benefits of crypto-enabled payments to the continent.”
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In fact, Ripple’s On-Demand Liquidity (ODL) technology, which has been deployed by banks and fintechs in Europe and the Middle East to drive cross-border payments, has significant potential for Africa’s emerging economies, where low currency liquidity can create challenges for efficient cross-border transactions.
Additionally, given MFS Africa’s wide footprint on the continent, the latest application of the RippleNet payment architecture is a milestone in the journey to blockchain technology’s growing entrenchment in the global financial infrastructure.
A diverse ecosystem
In his comments on the new Ripple partnership, Dare Okoudjou, MFS Africa’s CEO, hinted at the company’s plans to increase the use of blockchain technology.
Related: MFS Africa CEO: Prepaid Cards Open World of Online Payments to Millions in Africa
“The Ripple-MFS Africa partnership represents a confident, important and bold first step for our crypto strategy to leverage blockchain technologies to amplify our impact on consumers and businesses on the continent,” he said in the Ripple press release.
For mobile money service providers on the continent, it presents an opportunity to start implementing blockchain-based payment systems in the same way that banks and other FinTechs have, with MFS Africa playing a central role in engaging with these providers.
It also means that the firm’s ongoing crypto engagement may involve multiple blockchain protocols.
While the exact shape of various blockchains’ contribution to the mobile money ecosystem has yet to be determined, solutions based on various chains have been proposed. For example, the UNZA researchers designed their prototype based on HyperLedger Fabric, a token-agnostic framework that underpins IBM’s blockchain platform and is supported by a number of major banks.
Meanwhile, researchers in the UK and France have hypothesized solutions based on the Ethereum network.
Just as the world’s banks now interact with Ripple, HyperLedger and Ethereum, an overlapping cross-chain paradigm may also emerge as various stakeholders in Africa’s mobile money space embrace blockchain.
But regardless of the specific networks and protocols used, the benefits of blockchain technology for the mobile money ecosystem are the same ones that have helped put the technology at the forefront of innovation in the banking sector.
Indeed, with so many different stakeholders interacting with complex interconnected payment systems, immutable and mutually verifiable ledgers can help create the kind of transparency and trust needed to build stronger mobile money interoperability.
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