Cryptocurrency exchange Yellow Card has grown to be the largest centralized exchange in Africa since its launch in 2019, with $1.75 billion in transactions facilitated so far.
Chris Maurice and Justin Poiroux are the co-founders of Yellow Card, who launched the platform from their dorm room in Auburn, Alabama, in 2019.
Yellow Card offers an experience similar to Block’s Cash App, allowing users to buy cryptocurrencies using fiat currencies, which they can then send across a border.
However, in contrast to centralized exchanges like Coinbase, where many customers store their tokens for an extended period of time hoping that their digital assets will appreciate in value, the average customer on Maurice’s exchange keeps money on the platform for under five minutes.
“It’s literally like, I deposit a million Francs in Cameroon, I buy USDT or BTC, and then I send it off,” explained the company’s co-founder Maurice in an interview with CNBC.
The exchange lets users send money to 16 countries on the continent. More importantly, the platform has streamlined the process of converting crypto back to local currencies at the other end of that transaction.
The platform has now grown to become the largest centralized cryptocurrency exchange in Africa. With about 220 employees, Yellow Card currently boasts 1.4 million users across the continent.
Furthermore, the exchange has facilitated $1.75 billion in transactions since its launch in 2019. According to Maurice, the platform usually facilitates 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.
However, Maurice aims to turn Yellow Card into a billion-dollar company by expanding the service to the rest of the continent. “I realized very early on that there’s so much opportunity in all these countries and that we needed 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 grunt work – things like company registration and opening bank accounts, so that we would be ready to go.”
Crypto Presents Hope to Africa’s Broken Banking System
Part of Yellow Card’s stunning success could be attributed to the problems with Africa’s banking system, which has led to the increasing adoption of crypto.
For instance, the continent has a quasi-colonial payment framework, in which roughly 80% of cross-border payments originating from African banks are processed offshore, mostly 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 issue 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 grow. It’s not getting better, it’s actually getting worse.”
This creates a great opportunity for crypto to come in and fill in the gap presented by the traditional banking system, especially since crypto payments facilitate effective cross-border transactions that take place in real-time.
“Everyone is looking for alternative ways of making payments,” said Nigerian national Franklin Okoye, who earns a living by helping businesses to import goods like clothes and chemicals from China. “Everyone is going to crypto.”
This article was originally published by CryptoNews.