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The world economy is changing rapidly, but financial exclusion remains an ongoing issue. 2022 report by Visa show up that 2.1 billion people globally remain unserved or unprotected from digital financial services. This gap often traps individuals and businesses in underbanked regions in a cycle of limited growth and opportunity.
The good news? Emerging technologies, especially cryptocurrencies, provide an opportunity to rewrite this statement. Merchant acceptance of crypto payments has the potential to significantly increase the welfare of these underbanked economies.
Inflation shrinks money
It is becoming more and more difficult to rely on money in economies with high inflation and price volatility. Local currencies are so devalued in countries like Argentina, Venezuela, and Zimbabwe that regular cash transactions are fraught with inefficiencies.
Stablecoins that are linked to fiat currencies, such as Tether (USDT) and USDC (USDC), or cryptocurrencies like Bitcoin (BTC), can save the day. By enabling safer, peer-to-peer transactions without relying on erratic local currencies, crypto can help businesses protect their revenue. Crypto payments are less susceptible to the inflationary rates that cause currency to depreciate. This is extremely useful for regions where central banks are struggling to preserve economic stability.
The conversion is already evident. According to Deloitte 2022 survey93% of merchants adopting crypto had a positive impact on customer engagement and satisfaction metrics. As more traders recognize that crypto allows them to offer more efficient transactions, consumer trust has increased. In the long term, this will encourage more sustainable economic activity.
Crypto payments: An interconnected future for cross-border merchants and transactions
Rising levels of crypto adoption among merchants are also fueling cross-border growth. Crypto's ability to provide lower rates and faster settlement times is starting to make traditional SWIFT-based banking systems appear more outdated. Smaller businesses, in particular, can trade more efficiently with the help of cryptocurrency payments, reducing excessive fees and reducing the risk of volatile exchange rates.
In addition, decentralized currencies can guarantee transparent financial transactions and reduce corruption, which is essential for economic stability in lower-income areas. The move towards crypto ultimately leads to the expansion of local commerce, which has an inevitable, favorable effect on the economy as a whole.
Micropayments: a game changer for financial inclusion
The willingness to accept crypto also opens up a largely untapped opportunity to promote financial inclusion. In underbanked regions, where daily income may be as low as a few dollars, traditional banking fees make small transactions impractical. Cryptocurrencies, however, enable contactless micro-payments with minimal fees, unlocking a new frontier for commerce.
If farmers, for example, can sell produce in small increments without losing significant income to transaction costs, profit margins increase and thus create strong financial activity in local economies. Similarly, crypto allows service providers, such as ride-sharing drivers or local tradesmen, to receive smaller payments instantly and directly, bypassing intermediaries. This embeds a sense of fluidity in the form of daily transactions.
As crypto becomes more widely accepted, it will also become more feasible to deal with things like pay-as-you-go household utilities in micropayments. This can eliminate the need to pay large, upfront, unaffordable costs in communities struggling to stay above the bread line. In this sense, the power of crypto micropayments has the potential to change lives.
Businesses in emerging and developing markets serve a young and tech-savvy underbanked population, creating a unique opportunity for innovative payment solutions. While mobile money has been transformative in closing the financial gap for the unbanked, cryptocurrencies present an even more powerful and convenient alternative.
By offering increased access, lower transaction costs, and limitless possibilities, cryptocurrencies empower businesses to serve this demographic with seamless, reliable, and inclusive financial services. For these markets, crypto adoption could redefine financial ecosystems and accelerate economic participation.
Key considerations for payment solution providers
While the promise of crypto is undeniable, it is not a one-size-fits-all solution. It is essential that payment providers address a number of key factors when developing systems specifically designed for unbanked sectors.
For starters, solutions must be designed with inclusion in mind. Many underbanked people lack access to sophisticated technology, so systems should work quickly on basic smartphones or even feature phones. User interfaces must be intuitive to encourage widespread adoption.
Related to this is the need to make adequate awareness of educational resources. Crypto can be scary for first time users. Payment providers should invest in educating both merchants and customers on how crypto works, how to benefit from it, and how to realistically manage risks. Financial literacy initiatives will play a vital role in building trust and widespread acceptance from both buyers and consumers.
Regulatory compliance is also a challenge that requires careful navigation. Working in sub-banking sectors can be a complex process in this regard. Suppliers must work closely with governments to ensure compliance while advocating for clear, supportive policies that enable innovation. Above all, security is paramount. Providers must implement strong fraud prevention measures. Hacks and the fear they instill among new users are often a major reason for slow adoption and undermine any trust progress.
Final thoughts
The integration of cryptocurrencies into merchant ecosystems in underbanked sectors is more than just a technological shift – it is an opportunity to drive economic welfare and promote inclusion.
Cryptocurrency payments have the potential to become a strong equalizer in the global economy by solving the shortcomings of current payment systems, enabling companies to do business internationally, and helping people to avoid the pitfalls of cash dependence.
However, collaboration between local communities, governments, and payment solution providers is critical to success. Accepting cryptocurrency payments has the potential to be a key part of financial inclusion for billions of people around the world, surpassing the standard of a certain movement with the right methods.
