Africa-based fintech startup, Yellow Card, has secured USD 33 million in venture capital funding from Blockchain Capital and other investors. This funding highlights the role of cryptocurrencies in transforming finance in emerging markets and facilitating capital movement in regions with underdeveloped banking systems.
Despite its growth, Yellow Card faces challenges as four North African countries have banned cryptocurrencies, and several Sub-Saharan nations have issued warnings about their use. Notably, Nigeria recently took steps to seize funds in cryptocurrency wallets to disrupt financial support for protest movements.
Operating in 20 African countries, Yellow Card provides a payment platform that enables users to transfer money across borders at significantly lower fees compared to traditional money transfer services. The new funding will help the company expand its customer base and enter additional markets, including Ethiopia, Egypt, and Morocco, which is considering new regulations to further embrace digital currencies.
Founded in 2016, Yellow Card employs stablecoins, typically pegged to the US dollar, as a standard medium of exchange to facilitate transactions. Customers depositing local currency receive stablecoins such as USDT and USDC, allowing them to conduct international transfers in various currencies through the Yellow Card platform.
As many African currencies experience instability or depreciation against the US dollar, Yellow Card has developed a system to trade in local currencies with minimised risk, effectively positioning itself as a market maker for African currency transactions. The startup has dedicated years to building a substantial customer base, enabling it to balance deposits and withdrawals while carefully managing its treasury.
The competitive advantage Yellow Card has established in its operational regions has led to partnerships with prominent crypto firms, including Coinbase and Block, which have chosen to utilize Yellow Card’s financial infrastructure rather than compete directly.
The African fintech landscape has experienced significant growth in recent years, driven by a surge in digital financial services and a notable increase in the adoption of cryptocurrencies among both consumers and businesses. With a rapidly expanding internet infrastructure and a young, tech-savvy population, the continent has become an attractive market for fintech innovations. Services such as mobile payments, digital wallets, and peer-to-peer lending have gained traction, enabling users to access financial tools previously unavailable due to underdeveloped banking systems. Additionally, cryptocurrencies are being embraced as alternative means of payment and investment, providing solutions for remittances and cross-border transactions at lower costs.
Africa has emerged as a hotspot for fintech innovation, largely due to its high mobile penetration rates and the pressing need for financial inclusion. Many individuals and businesses in the region remain unbanked or underbanked, creating a fertile ground for digital solutions that offer accessible financial services. Mobile technology has facilitated the leapfrogging of traditional banking infrastructure, allowing fintech companies to reach underserved populations.
