Ripple and Onafriq Forge Alliance for Blockchain-Enabled Payments in Africa

Ripple, a frontrunner in blockchain and cryptocurrency solutions, has joined forces with Onafriq, a leading payments fintech, to revolutionize digital asset-enabled cross-border payments connecting Africa with the Gulf Cooperation Council (GCC), the UK, and Australia.

The partnership marks a new era of efficiency for remittances and business payments across these regions, as Onafriq integrates Ripple’s crypto-enabled payment technology to establish new payment corridors. This collaboration is set to address the longstanding hurdles in cross-border payments, such as high costs, slow transfer times, and reliability issues, thereby accelerating financial inclusion across the African continent.

Utilizing Ripple’s robust blockchain technology, Onafriq is poised to dismantle the barriers that have historically plagued cross-border financial transactions. The collaboration will connect PayAngel in the UK, Pyypl in the GCC, and Zazi Transfer in Australia with Onafriq’s extensive pan-African network, encompassing 27 countries. This move is expected to vastly improve the speed and affordability of sending remittances and conducting business payments to Africa.

Onafriq boasts the largest mobile money footprint across Africa, a continent where mobile money has been transformative in enhancing financial services access. The fintech’s payment hub unites over 500 million mobile wallets across 40 countries, operating in more than 1300 payment corridors. This level of connectivity is pivotal for fostering regional payment interoperability and facilitating seamless cross-border transactions.

The announcement coincides with the appearance of Dare Okoudjou, Onafriq’s Founder & CEO, at Swell Global 2023 in Dubai. This event, Ripple’s annual customer conference, provides a platform to showcase the partnership’s potential to leverage blockchain technologies to amplify Onafriq’s impact on the African continent.

Aaron Sears, SVP of Global Customer Success at Ripple, expressed excitement over expanding their solutions into Africa. Meanwhile, Dare Okoudjou highlighted the partnership’s alignment with Onafriq’s mission to diminish the relevance of borders in African payments. Partner CEOs from PayAngel, Pyypl, and Zazi Transfer also shared their perspectives on the transformative potential of the collaboration for remittances and economic growth in Africa.

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Citi Forecasts Major Shifts in Cross-Border Payments Landscape

Key Takeaways

An anticipated surge in cross-border payments, with the value set to rise from nearly $150 trillion in 2017 to over $250 trillion by 2027, marking an increase of over $100 trillion within a decade.

The Bank of England’s estimation aligns with this projection, emphasizing the significant opportunities for entities in the cross-border payments domain.

Market dynamics indicate potential shifts in market share, with almost 90% of financial institution clients surveyed by Citi believing that at least 5% of the market share will transition, mainly to FinTechs, in the upcoming 5-10 years. Notably, 40% observed that a share of the wallet has already been redirected.

Citi’s recent Global Perspectives & Solutions (Citi GPS) report, titled ‘FUTURE OF CROSS-BORDER PAYMENTS — Who Will Be Moving $250 Trillion in the Next Five Years?’ sheds light on the transformative potential of the cross-border payments industry.

Jane Fraser, CEO of Citi, stated, “Our industry is on a journey to reach the next phase of evolution within cross-border payments.” She emphasized the collaborative efforts with financial institutions, FinTechs, corporates, and industry experts to leverage technologies like artificial intelligence and digital assets to revolutionize the cross-border payments experience.

Shahmir Khaliq, Global Head of Services at Citi, pointed out the evolving nature of competition in the industry. He noted the shift from traditional payment methods to API connectivity, providing FinTechs and other participants with enhanced opportunities through established financial infrastructures. Regulatory initiatives, such as open banking, are further propelling innovation.

However, challenges persist. Legacy technologies and regulatory obligations consume significant portions of investment budgets. Despite these hurdles, financial institutions are increasingly focusing on innovation, exploring both traditional fiat currency and digital asset spaces.

Amit Agarwal and Debopama Sen, Global Co-Heads of Payments & Receivables at Citi Treasury and Trade Solutions, emphasized the growing attractiveness of the cross-border payments sector, driven by e-commerce growth and new business models. They highlighted Citi’s strategic objective to offer differentiated client experiences.

Ronit Ghose, Head of Future of Finance at Citi Global Insights, commented on the nascent stage of the digital asset space. He underscored the potential of emerging technologies, such as artificial intelligence and the Metaverse, to disrupt the cross-border payments landscape.

The report underscores the importance of client experience, with over 50% of financial institutions recognizing the need to revamp front-end interfaces to enhance client interactions and remain competitive.

The Citi GPS report is a culmination of insights from market infrastructure experts, FinTechs, and banks from four continents. The overarching sentiment from over 100 of Citi’s financial institution clients is clear: Speed, cost-efficiency, and transparency are paramount for superior client experiences.

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BIS Survey: 93% of Central Banks Engaged in CBDCs, 15 Retail and 9 Wholesale CBDCs Expected by 2030

The Bank for International Settlements (BIS) has released a survey revealing that 93% of central banks are now engaged in some form of Central Bank Digital Currency (CBDC) work, with retail CBDCs taking the lead over wholesale CBDCs.

The survey, which gathered responses from 86 central banks, shows that over half of these institutions are not just exploring CBDCs but are conducting concrete experiments or working on pilots. The progress in retail CBDCs is more advanced, with almost a quarter of central banks piloting a retail CBDC.

The BIS survey also highlights the perceived value of CBDCs. More than 80% of central banks see potential benefits in having both a retail CBDC and a fast payment system (FPS). The unique properties and additional features that a retail CBDC can offer are seen as key advantages.

The emergence of cryptoassets and stablecoins has been a significant influence, accelerating CBDC work for nearly 60% of the respondent central banks. However, the survey also notes that stablecoins and other cryptoassets are rarely used for payments outside the crypto ecosystem.

The survey suggests that by 2030, we could see 15 retail and nine wholesale CBDCs in public circulation. This projection reflects the growing interest in digital currencies by central banks worldwide.

In terms of motivation, central banks in emerging market and developing economies (EMDEs) are more likely to be driven by financial inclusion-related motivations in their CBDC work. On the other hand, the desire to enhance cross-border payments primarily drives the work on wholesale CBDCs.

Currently, four central banks have issued a live retail CBDC: The Bahamas, the Eastern Caribbean, Jamaica, and Nigeria. This development marks a significant milestone in the global adoption of CBDCs.

The BIS survey provides a comprehensive overview of the current state of CBDC development and offers valuable insights into the future trajectory of digital currencies. As the exploration and experimentation with CBDCs continue, their role in the global financial system is set to become increasingly significant.

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Malaysia’s Central Bank actively assessing CBDC options

Malaysia has joined the growing cadre of nations that are exploring the value of researching and developing a central bank digital currency (CBDC).

Malaysia’s central bank, Bank Negara Malaysia, stated to Bloomberg on Jan. 17 that while a decision about exactly how to move forward with a CBDC has not yet been determined, it has focused research on a CBDC “via proof-of-concept and experimentation to enhance our technical and policy capabilities.”

It also stated that the ostensible reason for the current research effort was to ensure it is prepared to launch a CBDC program “should the need to issue CBDC arise in the future.”

In 2021, Malaysia collaborated with South Africa, Australia, and Southeast Asian neighbor Singapore to develop a proof-of-concept CBDC pilot called Project Dunbar, according to a joint announcement.

Project Dunbar utilized the Corda and Quorum blockchain platforms from r3 and ConsenSys respectively to demonstrate various capabilities of blockchain-based cross-border remittances. Most notably, it aimed to demonstrate how blockchain technology could “eliminate the need for intermediaries and cut the time and cost of transactions.”

An increasing number of nations are researching how a CBDC program would operate in their jurisdiction. China is by far the largest nation currently executing a CBDC pilot program, dubbed the Digital Yuan, and the mobile app already has over 20 million downloads since Jan. 4. China plans to launch the program and allow international visitors to access Digital Yuan with their passports during the upcoming Winter Olympics in Beijing next month.

Related: CBDCs and stablecoins: EY advises banks to ‘prepare for what’s coming’

The Eastern Caribbean Central Bank (ECCB) rolled out its finalized CBDC called the “EC dollar” in Mar. 2021. As of Dec. 2021, Antigua was the last of eight jurisdictions in the ECCB to not have adopted the EC dollar. Nearby Jamaica also plans on launching a finalized CBDC by Q1 2022 following the successful pilot program which concluded two weeks ago.