How Internet Payments with Stablecoins Could Affect SA

What happened

Steven Boykey Sidley recently explored how money is becoming native to the internet, focusing on innovations like stablecoins and new payment frameworks such as x402. Essentially, these technologies are designed to embed money directly into the internet's infrastructure, making sending and receiving payments as seamless as clicking a link or sending a message.

Stablecoins are a type of digital currency tied to traditional assets like the U.S. dollar. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins aim to offer price stability, making them more practical for everyday transactions. The concept of a payments layer that is native to the internet refers to a system where money moves as quickly and easily as data.

Why it matters

Creating a native payments layer on the internet could revolutionise how we transact. Instead of relying heavily on banks and intermediaries, stablecoins and associated technologies promise faster, cheaper, and more transparent transactions. For everyday South Africans, this could mean easier cross-border payments, reduced costs when buying or selling online, and better access to digital financial services.

Furthermore, this shift could enhance financial inclusion. Millions of South Africans remain unbanked or underbanked due to challenges like distance, documentation, or credit history. Digital money native to the internet could open new doors for accessing loans, savings tools, and payment methods.

What this means for South Africans

While South Africa has a fairly developed banking infrastructure, many people and small businesses still struggle with slow payments, high transaction costs, and challenges sending money abroad. Internet-native money like stablecoins could address some of these issues by being quicker, cheaper, and more accessible through smartphones.

This could especially benefit remittances – money sent by South Africans working abroad back to their families. Currently, remittance fees are high, and payments can take days. A stablecoin system could reduce costs and speed up transfers.

For consumers, the shift could mean new ways to shop online locally and internationally without worrying about currency conversion costs or excessive charges from payment gateways. Small businesses might find selling digital goods and services easier if payments can happen instantly and reliably.

Impact on consumers, jobs and small businesses

Consumers could enjoy lower costs and faster payment options, potentially enhancing their online shopping and bill payment experiences. For small business owners, especially those in e-commerce, this presents opportunities to tap into international markets without typical banking hurdles.

Moreover, because internet-native money systems often don’t rely on traditional bank credit checks, entrepreneurs with little or no credit history may access financial tools and loans more easily. This can spur small business growth and job creation.

On the job market side, widespread adoption of such systems could lead to new opportunities in fintech, digital marketing, and customer service sectors — areas that will grow as digital transactions increase.

Risks and limitations

Despite the promise, there are important considerations and risks.

Firstly, regulatory uncertainty exists around stablecoins in South Africa and globally. Authorities are concerned about money laundering, financial stability, and consumer protection. Until clear rules are in place, widespread adoption may be slow or limited.

Secondly, infrastructure challenges such as internet connectivity and smartphone access remain in parts of South Africa. For digital-native money to be truly inclusive, these barriers need addressing.

There are also risks related to technology security and fraud. Without strong protections, users could be vulnerable to hacks or scams.

Lastly, while stablecoins aim for stability, they are not risk-free and depend on the assets they are pegged to, which may fluctuate. Awareness and education on using these technologies safely are crucial.

In conclusion, money becoming native to the internet through stablecoins and new payment layers could reshape South African financial life. It holds promise for easier, faster, and more inclusive digital transactions, though challenges remain that require careful navigation by regulators, businesses, and consumers alike.

(Source: Steven Boykey Sidley, TCS)

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