While opponents of cryptocurrencies continue to peddle the environmental damage or the terrorism funding narrative, users from countries where the majority is financially excluded see these as a breakthrough innovation.
Crypto Utility Inspires Volatility Solutions
For instance, to undocumented migrants, cryptocurrencies offer a faster and cheaper way of sending money to their loved ones. For users that reside in countries with unstable currencies, cryptos act as an alternative store of value. Cryptocurrencies also act as a shield in times of hyperinflation. In some places, small businesses are now using cryptocurrencies to make cross-border payments.
Despite this growing use of cryptocurrencies, however, many businesses and merchants are still reluctant to accept crypto payments. One of the challenges that merchants in Africa often cite concerns crypto price volatility. This unpredictability can make these alternatives to fiat currencies less alluring from the point of view of a merchant.
To overcome this particular challenge there has to be a solution that insulates the merchant’s crypto earnings from wild price swings. Over the years, many start-ups have been attempting to provide a solution to this problem but without much success. In South Africa, one fintech start-up, 6DOT50, claims to have created a solution that is now used by some 40,000 merchants. To understand more about this solution, a news reporter reached out via email to Warren Venter, the start-up’s founder and CEO.
News Reporter: When did you start operating?
Warren Venter (WV): The business was formed in 2019 and its first product offering was launched in May 2020, as the level five lockdown in South Africa resulted in domestic employers not having a way to pay their cash-based employees. This accelerated the development of the business and the introduction of our digital rand money vouchers.
NR: What gave you this idea?
WV: The traditional banking system has failed billions of individuals worldwide by imposing high fees and challenging documentation requirements, leaving them excluded from the digital economy. By introducing our voucher-based model, as an alternative store of value, 6DOT50 is able to offer any individual free access to a banking grade transactional account without the need to meet the KYC requirements associated with opening a bank account.
There is a gap between the cash and cryptocurrency world and the world of real production industries. We believe that cryptocurrencies and fiat will simultaneously co-exist so we provide a bridge between the different money worlds by providing a service of converting physical cash and cryptocurrencies to a digital representation of fiat that makes cash and crypto payments as acceptable as bank cards across our merchant network.
6DOT50, unlike traditional fintech solutions, is not a regulated business that focuses on making it easier for people to access and use a traditional bank account. Our unique value proposition is the use of our digital money vouchers as an alternative way to store money, send and receive money and pay for goods and services without the need to own a bank account.
NR: You have said there are over 40,000 merchants that are on board with your digital voucher solution. Is that an indication of the popularity of cryptocurrencies or is it a mere reflection of how much work your company has put into this?
WV: In order for our digital money vouchers to meet the primary functions of money, we needed to ensure that our products would act as a medium of exchange enabling our users to engage in transactions. By providing a bridge between the cash world, the crypto world and the fiat world, where merchants participate, we have been able to offer merchants competitive settlement fees and the ability to accept digital payments from traditionally cash-based customers. Our most recent integration providing an offramp from crypto to fiat currency offers merchants access to crypto value without having to accept cryptocurrency as payment. Growing our merchant footprint both locally and internationally is a key component of our platform offering.
NR: Many fintech start-ups have tried and failed to provide a solution or service that shields merchants from the extreme crypto price swings. What has 6DOT50 done differently that makes you feel confident that your solution will succeed?
WV: Unlike many fintech start-ups who have been trying to develop solutions for merchants to accept crypto payments directly from users, we believe that the crypto world and fiat world will co-exist. By developing a bridge between crypto value and fiat value we have made crypto as acceptable and bank card payments. Our money vouchers provide simple and affordable conversion layers that offer crypto users an offramp to fiat value and merchants a seamless way to accept the value without any of the risks associated with extreme crypto price swings.
NR: Do you plan to add merchants from outside South Africa?
WV: Yes. We are in the process of introducing our digital dollar money vouchers. These vouchers will not only provide South Africans with an easy way to hold U.S. dollar value but will open the door to international merchant opportunities.
NR: Have you had some kind of engagement with any of South Africa’s several regulators?
WV: Yes. Given the nature of our business we have engaged with, and in some instances partnered with, local and international stakeholders in the regulated payments space to ensure that our users are able to access and use our digital money vouchers.
NR: The South African crypto industry continues to be plagued by scams. How much of an impact is this having on your business and on the industry in general?
WV: We believe that the legitimacy of our business, as a new and still unknown entity, is best endorsed through the partners and merchants that we have managed to secure on our platform. With known, trusted and respected brands including Shoprite Group, Cape Union Mart Group, Famous Brands, and Zapper accepting 6DOT50 payments we hope to provide our users with a sense of comfort in that these brands do not merely integrate with everyone and the fact that they are accepting 6DOT50 payments is a credit to what we have achieved to date. Despite this, we need to earn the trust of our users by consistently delivering innovative solutions and delighting them with our service offering.
NR: In your opinion, what do you think needs to be done to help the South African crypto industry shake off the perception that it is dominated by scams?
WV: Our mission is to turn crypto into a currency by making it as acceptable as bank card payments across all merchants. Our current digital money vouchers provide a conversion layer and store of value that makes this a reality without having to replace or reinvent the current point of sale technology adopted by merchants. Driving usability of crypto is likely to attract a different set of users and attract institutional investors and millions of merchants who may offer a new form of oversight to reduce the potential for scams and change the perceptions.