Built on Stellar

Fonbnk provides an onramp for mobile-first, cash-based economies using prepaid airtime and USDC on Stellar

Company
Fonbnk
use case
Asset Issuance, Access to Fiat
Industry
Fintech, Wallet
Country
United States, Sub-Saharan Africa

About

Fonbnk

Fonbnk is a fintech company enabling a frictionless, financial onramp for emerging markets. Leveraging the existing network of mobile phone accounts, anyone with a prepaid mobile SIM card can now have access to the global digital economy.

Challenge

They say time is money, and time is literally money in Africa – specifically airtime (synonymous with the talk, text and/or data credit balances), which is time spent communicating through a mobile phone. 64% of Sub-Saharan Africans own at least one smartphone as of 20211. Compared to their US or European counterparts, mobile phone users in Africa do not have the same affordable access to unlimited data plans and widely available reception; rather, they often rely on pre-paid SIM cards and buy the data they need a certain amount for their required access. 

Since airtime is so valuable and readily accessible compared to other forms of mobile money, it is actively treated as a “de facto currency” that can be swapped out for cash or used to barter for goods and services2. However, due to the lack of robust cellular infrastructure across the African continent, airtime is subject to the whims and price increases of mobile carriers. According to the Africa Report, “[d]espite a 44% mobile penetration rate, Africa still has the world’s most expensive prepaid mobile data plans in relation to median incomes” with mobile data prices, on average, representing a staggering 8.76% of income.”3

“The biggest friction in the markets we go after is not necessarily self-custody. It is the high transaction costs and moving money around, since people are very price-sensitive to the cost of airtime. Stellar is a great partner to us from that standpoint.”
Chris Duffus
CEO and Founder · FONBNK

Solution

Understanding that airtime is just as good as cash in terms of value and utility, founder Chris Duffus wanted to build a blockchain-powered marketplace that would enable African mobile phone users to quickly convert their airtime credits into digital money and back. This would enable individuals and businesses to purchase discounted airtime, sell any excess airtime, and use airtime in general as a form of transactable value. 

To accomplish this task, Fonbnk integrated Stellar into its application, recognizing that the network was optimal for issuing assets representing any form of value, including airtime, and transacting said assets. Fonbnk can now turn the 8 billion active prepaid SIM cards globally4 into virtual debit cards via tokenization on Stellar. With Fonbnk’s wallet, the 1.4 billion people currently unbanked can now access financial services and markets previously beyond their reach5.

Asset Issuance and Tokenization

  • When users load prepaid airtime credits onto their Fonbnk wallets, those credits are on-ramped onto the Stellar network, digitized into tokens named MIN. Users can then turn those MIN tokens into USD Coin (USDC) on Stellar, the conversion happening near-instantaneously and with minimal cost.
  • Users can then use USDC to purchase goods/services not readily available in their markets; or, they can use USDC to top up their phones with discounted airtime, off-ramping back into physical cash through Stellar anchors.
  • Fonbnk also allows users to buy MIN with debit, credit, or crypto or send MIN to their family and friends.

A Frictionless User Experience

  • To ensure that their users were able to conduct microtransactions at scale through a sticky UX, Fonbnk chose to integrate Stellar into its application due to its low fees, fast speeds, anchor network, and seamless on/off ramps.
  • To use Fonbnk, the user starts by downloading the app and registering an account. Once the wallet has been created, the user has several options in which to use MIN.
  • To swap airtime for MIN, users are directed to an airtime marketmaker link to initiate the transaction. They then fill out the amount of airtime they want to convert into MIN, preview the swap, receive confirmation from the marketmaker that the transaction is pending, and confirm the swap. Once the marketmaker approves the swap from their end, the wallet balance reflects the appropriate MIN amount in a matter of seconds.
  • To top up their phones with airtime, users will input how much MIN they want to convert into airtime and hit submit. Once confirmed, they will immediately receive a message from their telecom providers with the amount of airtime they received.

    Results

    250k
    users
    ~$10M
    gross merchandise value (GMV)
    12
    Countries of operation

    Fonbnk has seen great appetite its product. Africa is no stranger to crypto and digital assets. According to analytics firm Chainalysis, “no region uses P2P platforms at a higher rate than African cryptocurrency users, as they account for 1.2% of all African transaction volume,”6 indicating strong interest and facility with cryptocurrencies and crypto-related products. 

    Aware of this demand, Duffus envisions a future where Fonbnk makes it easier than ever for users to access Web3. Not only will Fonbnk provide a swap feature in-app to allow users the flexibility of converting USDC on Stellar into other digital assets, but it plans to continue collaborating with other anchors such as Cowrie Exchange and others in the Stellar ecosystem. 

    Because ultimately, it’s all about the real-world use cases for Fonbnk. The global reach of MoneyGram-Stellar integration is of great interest to Fonbnk as it expands across Sub-Saharan Africa and beyond, pushes for more paths of least resistance for money to flow through Stellar rails, and enables users to go from physical cash to digital assets back to cash as quickly and smoothly as possible.

    “In many new markets where traditional financial services have frankly just given up, I think this is an opportunity for solutions like ours, in combination with Stellar, to make a big difference and help the next two billion humans join the digital financial world.”
    Chris Duffus
    CEO and Founder · FONBNK

    ¹ https://www.weforum.org/agenda/2022/06/as-young-africans-push-to-be-online-data-cost-stands-in-the-way/

    2 https://www.economist.com/finance-and-economics/2013/01/19/airtime-is-money

    3 https://www.theafricareport.com/14567/three-reasons-why-african-mobile-connectivity-is-misleading/

    4 https://www.researchandmarkets.com/reports/2228073/subscriber_identity_module_sim_global_market=

    5 https://thedocs.worldbank.org/en/doc/25dde6ca97fde9ec442dcf896cbb7195-0050062022/original/Findex-2021-Executive-Summary.pdf

    6 https://blog.chainalysis.com/reports/africas-grassroots-cryptocurrency-adoption/

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