Cryptocurrency exchange Yellow Card has achieved remarkable success in Africa since its launch in 2019, facilitating $1.75 billion in transactions thus far.
Chris Maurice and Justin Poiroux are the creators of Yellow Card, who set up the platform from their dorm room in Auburn, Alabama, in 2019.
Yellow Card has a similar offering to Block’s Cash App, allowing users to buy cryptocurrencies using fiat currencies, which they can then transfer across a border.
Unlike centralized exchanges like Coinbase, where many customers store their tokens for a long time in anticipation of the digital assets increasing in value, the typical customer on Maurice’s exchange keeps their funds on the platform for less than five minutes.
“It’s almost like, I deposit a million Francs in Cameroon, I buy USDT or BTC, and then I send it away,” said the company’s co-founder Maurice in an interview with CNBC.
The exchange permits users to send money to 16 countries on the continent. Moreover, the platform has simplified the process of changing crypto back to local currencies at the other end of that transaction.
The platform has now become the biggest centralized cryptocurrency exchange in Africa. With about 220 workers, Yellow Card presently has 1.4 million users across the continent.
In addition, the exchange has enabled $1.75 billion in transactions since its launch in 2019. According to Maurice, the platform usually manages around $5 million in transactions on a good day. On a slow day, it is closer to $1 million.
With all its success, Yellow Card currently has a valuation of $200 million. The company has also raised $57 million in funding from investors including Jack Dorsey’s Block and Valar Ventures, a venture capital firm co-founded by Peter Thiel.
Nevertheless, Maurice aspires to make Yellow Card a billion-dollar company by extending the service to the rest of the continent. “I realized very early on that there’s so much potential in all these countries and that we had to be the first one there,” said Maurice.
“I drove from South Africa to Botswana, Zimbabwe to Zambia, then flew up to Ethiopia, Ghana, and Uganda. In all of these places, I was doing the legwork – things like company registration and opening bank accounts, so that we would be all set to go.”
Crypto Offers Hope to Africa’s Broken Banking System
Part of Yellow Card’s incredible success could be attributed to the issues with Africa’s banking system, which has led to the rising adoption of crypto.
For instance, the continent has a quasi-colonial payment infrastructure, in which roughly 80% of cross-border payments originating from African banks are processed overseas, mainly in the US or Europe, which translates to higher costs and processing times that are sometimes measured in weeks.
“The entire banking system in Africa is completely and utterly broken, even amongst the mobile money providers, the telcos,” said Ray Youssef, the CEO of Paxful. He added that another problem is that payment operators in the continent are not connected.
“Two thousand payment networks and only 2% of them talk to each other. That number continues to increase. It’s not improving, it’s actually getting worse.”
This creates an excellent opportunity for crypto to come in and fill in the gap presented by the traditional banking system, especially since crypto payments facilitate fast cross-border transactions that take place instantly.
“Everybody is looking for alternative ways of making payments,” said Nigerian national Franklin Okoye, who earns a living by assisting businesses to import goods like clothes and chemicals from China. “Everybody is going to crypto.”