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- By leveraging the power of the Stellar Lumens blockchain, Fonbnk will provide financial on-ramps in cash-based economies.
- With Stellar, Fonbnk will convert prepaid SIM cards into virtual debit cards and will tokenize prepaid airtime credits into tokens named MIN which can then be turned into USD Coin (USDC).
Peer-to-peer decentralized platform Stellar is undertaking a new and ambitious initiative to bring solutions, especially in the under-penetrated regions. For This, Stellar recently announced its partnership with fintech firm Fonbnk.
By leveraging its existing network of mobile phone accounts, Fonbnk plans to provide financial on-ramps in cash-based economies. Even in 2022, nearly 350 million people in Africa don’t have access to bank accounts. Besides, only 20 percent of the families have formal bank accounts.
From their study, Fonbnk found that 64 percent of sub-Saharan Africans have at least one smartphone as of 2021. Most of these smartphone users use pre-paid SIM cards and will buy data as per their requirements. Compared to other forms of mobile money, airtime is readily accessible in Africa and treated as a “de facto currency” that can be used as a barter to get other goods and services.
350 million people in Africa don't have access to bank accounts, and only 20% of families have formal bank accounts.@fonbnk1 provides a real-world solution to this problem by turning 8 billion active prepaid SIM cards globally into virtual debit cards with Stellar.
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— Stellar (@StellarOrg) November 14, 2022
But another catch is that due to the lack of robust infrastructure across Africa, the airtime is subject to whims and price increases by mobile carriers. Fonbnk aims to solve this entire issue by turning active prepaid SIM cards into virtual debit cards running over the Stellar blockchain. Fonbnk says that it can do this for the entire 8 billion population of the world. Speaking of this development, Chris Duffus, CEO, and founder of Fonbnk said:
The biggest friction in the markets we go after is not necessarily self-custody. It is the high transaction costs and moving money around, since people are very price-sensitive to the cost of airtime. Stellar is a great partner to us from that standpoint.
Fonbnk converting airtime into cash
Fonbnk found that for Africans, airtime is similar to cash in terms of value and utility. Thus, in partnership with Stellar, it is establishing a blockchain-powered marketplace that will convert airtime into digital money and vice versa. As a result, individuals and businesses would be able to treat airtime as a transactive value.
Fonbnk notes that by using its wallet, 1.4 billion people across the world will be able to access financial services and markets beyond their reach. Users just need to load their pre-paid airtime credits into their Fonbnk wallets. Fonbnk adds “those credits are on-ramped onto the Stellar network, digitized into tokens named MIN which can then be turned into USD Coin (USDC)”. All these conversions will happen nearly instantly and with a minimal cost.
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Users can use these USDCs to purchase goods and services not readily available in their markets. Fonbnk will also allow users to buy MIN with debit, credit, or crypto or send MIN to their family and friends. “I think this is an opportunity for solutions like ours, in combination with Stellar, to make a big difference and help the next two billion humans join the digital financial world,” added Duffus.
