During the recent Global IEEE 5G-IoT Blockchain Summit in Exeter, Centbee’s co-founder and CEO, Lorien Gamaroff, presented his company and discussed the challenges of digital cash payments. While Centbee was founded in South Africa, it is a UK-based holding company with a passion for emerging economies.
Gamaroff, who was born in Zimbabwe and raised in South Africa, expressed excitement about the potential of digital cash payments in these economies. He noted that the trend towards digital payments is clear, as evidenced by the push towards central bank digital currencies by governments, central banks, and financial institutions worldwide.
The state of the digital economy in emerging economies
Centbee’s founder mentioned the increasing availability of mobile devices and digital networks in emerging economies, which are becoming more pervasive. An important point to note, however, is that they are not yet universally reliable due to network instabilities. Solutions have to take this problem into account.
Gamaroff emphasised the need for resilience in creating a world that enables digital cash payments to move forward. He illustrated this development in a few key examples of emerging economies: South Africa, Nigeria and India.
South Africa’s digital economy
In South Africa, banks are exploring financial inclusivity through solutions like PayShap, which aims to provide digital payment options for traditionally underbanked and underserved populations. The major banks in South Africa are adopting this solution and piloting it in the taxi industry, where many South Africans rely on minibus taxis to travel between rural communities and towns.
The goal is to set up these taxis with Wi-Fi connectivity and encourage the use of PaySharp to drive the adoption of digital payments, although the success of this initiative remains to be seen.
Nigeria’s digital economy
Gamaorff discussed how the Nigerian government is attempting to promote the adoption of their central bank digital currency (CBDC) by offering discounts to drivers of taxis or “tuk tuks”, similar to an initiative being piloted in South Africa.
However, the challenge is that many Nigerians are already familiar with cryptocurrencies and it remains to be seen how successful the promotion of the CBDC will be in convincing both consumers and merchants to adopt it. This is particularly interesting as it is the first time a central bank digital currency is being pushed out into the African retail market.
India’s digital economy
Shortly before the summit launched, India launched a wholesale pilot of their digital rupee to make it widely accepted in retail, allowing individuals and merchants to transact using the digital currency.
While the introduction was still very recent at the time of the presentation and no data on adoption is available, the move reflected the growing significance of governments and central banks pushing for digital payments, Gamaroff said.
Insufficient network coverage
Gamaroff kept coming back to the issue of disconnected payments. As he outlined, there are two factors contributing to the problem. These are the limited access to devices, with which payments can be done, but also the reliability of the network infrastructure, which is often insufficient in emerging economies.
While South Africa has been rolling out cell phone towers, the network is still not perfect or redundant. The concern is that the digital push for payments from a policy standpoint does not address the problem of widespread network coverage in emerging countries.
This poses a challenge for countries with rural communities, where access to reliable network coverage is limited. It remains unclear how this problem can be solved anytime soon, despite the low-cost nature of digital payments.
The market situation for Centbee
Compared to central banks and governments that take on the issue of digital payments, Centbee is relatively small. However, Gamaroff noted that Centbee has a growing user base, particularly in emerging markets like India, the Philippines, and Nigeria. They also have users in Nepal and various other African countries, including Kenya, Uganda, Ghana, Senegal, and Cote d’Ivoire.
However, Gamaroff acknowledged that the group is set to encounter similar issues as banks and central banks, and they are looking for solutions to address these problems. Gamaroff then goes further into detail on why Centbee chose to build on BitcoinSV for their business.
Disconnected digital payments
The founder of Centbee then discusses the possibility of creating a solution that would eliminate the need to worry about connectivity issues, taking the example of a spaza shop in South Africa, where many people have smartphones but face intermittent digital network problems.
The key to solving this issue is to enable peer-to-peer digital cash payments, where users can pay each other directly without relying on the digital network’s consistency. This approach would allow users to make payments and settle the transactions once they reconnect to the network.
Read: This is the biggest change for online payments since PayPal
Relying on BSV blockchain
Centbee has settled on using the BSV blockchain because it allows for low-cost transactions, which is especially important for small-value items like cigarettes and SIM cards. They also utilise a process called simple payment verification, which enables users to exchange value with each other and push transactions to recipients without needing a constant internet connection.
However, users still need a way to connect, which is currently what Centbee is working on. Overall, the goal is to create a peer-to-peer cash network that is not hindered by intermittent internet connectivity.
IPv6 for true peer-to-peer payments
Gamaroff explains that IPv6 is a helpful technology to connect users securely without any entity interfering in the middle. Users can then share a small amount of digital information, such as transaction information, via NFC or other methods, which can be verified by the recipient, and the transaction can be completed.
This three-part process is essential to make disconnected digital payments a reality, even in a closed loop without network connectivity.
Read: An update on Bitcoin and IPv6’s integration
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