The newest generation of startups aiming to solve cross-border payments are focusing on stablecoins β cryptocurrency coins often pegged to actual currencies or other commodities to help them keep stable prices β to build solutions that work faster and often cheaper than classic financial rails.
This trend is also driving a surge in investor interest in fintech. The latest development is Cedar Money , a U. Like many cross-border payment platforms using stablecoins, Cedar Money acts as a bridge. Businesses and individuals transact using a fiat-based site, while stablecoin transactions run in the background. Cedar Money plans to scale its payment infrastructure and tackle the inefficiencies in international payments with this funding, it said.
These inefficiencies are particularly painful in Africa, where businesses face higher transaction fees and hidden costs in currency conversions because of added risk and the costs of working with local banking. Banks profit from exchange rate spreads, adding another layer of expense. Feinberg founded Cedar Money in after nearly a decade leading alternative financing provider Behalf.
While stablecoins have struggled to gain traction in the U. Businesses across Africa, the Middle East, and South America need dollars to pay for imports, even when buying from countries like China. In countries like Nigeria or Argentina, getting dollars can be a struggle due to weak local currencies like the naira or the Argentine peso. Cedar Money launched in early , starting operations in Nigeria, helping businesses in the country accept and send money to others globally.
However, despite their popularity, stablecoin platforms face limitations that may affect their scale across markets. These requirements are particularly tricky in markets like Africa, where infrastructure differences make seemingly simple demands β like providing a street address β much more challenging.
