Payment leaders, regulators, and developers share successes and outline how to build an inclusive global financial system at the Interledger Summit in Cape Town. But warn that time is short.
Around two hundred banking and fintech leaders, regulators, parliamentarians from seven African countries, payment professionals, and developers gathered at the Interledger Summit recently. Discussions focused on how best to create an inclusive financial ecosystem through open payments.
Panelists stressed the urgency of architecting systems that prioritize building an ethical financial system that includes underserved populations globally, drawing on use cases that prove it is not only possible but also economically sustainable.
Briana Marbury, Interledger President and CEO welcomed guests to the third Interledger Summit, explaining: “The UN Sustainable Development Goals has identified digital financial inclusion as a way to drive economic growth in suppressed communities. At Interledger, we’re aligned with this belief and work to support this with a focus on inclusive business models.” Reflecting on just how rapidly technology, finance, and inclusivity are converging, her insights were echoed throughout the conference.
“We’re on the brink of a financial revolution that has to do with digital finance. Much like the internet fundamentally changed things in the early days, we’re about to do that again with the financial industry, and it’s so exciting,” said panellist and CEO of Least Authority, a leading Web3 security consulting company, Liz Steininger. “But we must make sure that we architect this in a way that we can protect human rights while still giving more people access to financial services. We just have a small window of time, and we must take it seriously.”
It’s expensive to be poor
Attendees heard from Kosta Peric, who oversees the Bill and Melinda Gates Foundation’s efforts to support governments, central banks, and private-sector stakeholders in developing and deploying inclusive digital payment and identity platforms. He helped contextualize the importance of inclusivity, sharing the costs of relying on cash, and how the most vulnerable were forced to walk long distances or take expensive transport to spend their cash.
Fortunately, this is changing with the advancement of technology. Peric shared that the more than 250 mobile money projects in Africa proves money can be made by providing financial systems to the underserved and paves the way for more businesses to get involved. He also referenced the many benefits of Digital Public Infrastructure (DPI) initiatives such as instant payment offering such as TIPS operated by the Bank of Tanzania.
In South Africa, BankServ has built PayShap and TCIB. Payshap has seen a 28% growth in account uptake (among those 15+ years and older) over the last 17 months, and R48 billion processed via 10 banks.
Peric said he also saw further collaborative opportunities facilitated by organizations like Mojaloop, which provides open-source software for creating payment platforms that will help unbanked people access digital financial services.
Cross-border payments still a key challenge
The summit addressed the many challenges facing cross-border payments, still one of the key use cases for open payments in developing countries.
Participants heard how remittances were quickly overtaking foreign direct investments (FDI). Recent data indicates that remittances to low- and middle-income countries (LMICs) are projected to reach approximately $656 billion, surpassing both official development assistance (ODA) and FDI. This has increased the urgency to facilitate fast, safe cross-border payments.
A lack of harmonised regulation has complicated the environment, but the growing importance of remittances is serving as an incentive for central banks to draft enabling regulations. However, attendees were warned that for now, cross-border payments were still regarded as the Wild West of the payment landscape, and that if organisations were looking for a solution, they may be forced to build one.
“Fifteen years ago it was very hard to innovate in this space. And I think it’s underappreciated how much cryptocurrencies and blockchain have achieved. Not in terms of replacing what’s there, but pushing boundaries and forcing people to rethink access,” said Adrian Hope-Bailie, founder at Fynbos.
Enej Pungercar, CEO of Gatehub went on to explain that the Interledger Protocol would be a highly efficient end-user to end-user payment rail, similar to Visa and Mastercard, with stablecoins as a replacement for real-time gross settlement (RTGS) or Swift.
The Interledger Foundation, which aims to foster global digital financial inclusion and equitable access, has developed the Interledger Protocol (ILP). This open source protocol, based on open standards, is currency agnostic. It allows anyone to send value anywhere, exchange currencies of all types, and is designed to make payments faster, easier, and cheaper.
Stefan Thomas, co-creator of the Interledger Protocol and chairperson of the board at the Interledger Foundation says: “Since we started with the idea for Interledger some years ago, it has grown beyond anything we could have imagined with such potential and so many people excited about it. I believe we can really change the world in a very fundamental way and impact a lot of people.”
The tech is here and it’s working
The Interledger Summit always showcases various technological innovations designed to enhance financial inclusion, and this year was no exception.
The People’s Clearing House, an Interledger grant recipient, has connected community banks in Mexico so people can transfer money and get remittances at minimal costs.
Similarly, Canadian-based Chimoney, also a grantee, allows users to manage multi-currency wallets, receive payments from anywhere, and send money easily and cheaply.
Closer to home, Zambian academic Prudence Kalunga is also looking at putting blockchain into ‘stokvels’ to add functionality and increase safety for village banking.
UN gets involved
The Interledger team shared the work it was doing with the United Nations, saying that in May the organization had been mandated by an intersectional working group of the United Nations Internet Governance Forum to explore open, interoperable, payment protocols and what this could mean for the future of The Internet for 2030 and beyond.
This collaboration is set to enhance the work already underway within the ecosystem and panelist, Jeremiah Lee, a past Interledger ambassador and digital human rights activist, told attendees that “Interoperability is the final stage of commoditization.” This highlights that interoperability breaks down silos between organisations, encouraging shared data and resources, and leads to collective growth and innovation – all essential for achieving economies of scale.
Marbury closed the Summit by reminding attendees that the work ahead was urgent, but that the Interledger Foundation was encouraged by the progress already made, which she said was testament to the growing global movement toward open interoperability and inclusive financial systems.
“For four years now, the Interledger Foundation has continued to evolve and expand its reach, enabling seamless payments across different networks and breaking down the barriers that once stood in the way of financial inclusion. As we stand on the brink of transformative change in the way that we exchange value, there has never been a more urgent need for collaboration, creativity and commitment from all stakeholders in this ecosystem.”
Staff writer