In recent years, the blossoming of mobile payments and related services has led to increased financial inclusion in many countries, including developing countries. But still, there remains an unbanked population that does not utilize such services. 

Some factors deter them from financial institutions. So, what does unbanked mean? What are the alternatives for making payments? Let’s get into this topic with the PaySaxas experts. 

Identifying the Unbanked: Who Are They?

Today, there is a group of people who do not have access to banking services. This is due to many aspects: lack of trust in the system, no ability to deposit money into an account, no technology to manage online services, and so on. So who is this unbanked population? Let’s give them a definition together. Unbanked refers to adults who do not use or have access to any traditional financial services.

Generally speaking, this applies more to people living in smaller countries or those that are poor. But, they can also be found in almost any country in the world. Specialists clearly define unbanked meaning. Just because people don’t use financial institutions doesn’t mean there aren’t other options. But we’ll talk about that a little later. 

Examining the Challenges Faced by the Unbanked

There are many nuances that stop people from using banking services. They are weighty and impressive, so as a result we have a high unbanked population figure. Let’s break down a few such factors with the PaySaxas team. 

The Barrier of Low Income

A large proportion of the world’s people still prefer cash payments or use a very limited range of services. For example, because of a bad credit history or large debts, many people close their accounts and cards. Or they keep their savings in cash as a matter of principle. 

Many people refuse to use additional financial services because they think they have no money: what is the point, they think, of opening an investment account or deposit if they have nothing to put in it?

Navigating High Banking Fees

These days, banks don’t all go out of their way to meet customers. Often, these financial institutions set high fees for using their services. Due to this situation, they live, progress, and earn money. There is a category of people and companies that do not want to pay for such transactions. 

There is some logic in this, but banking companies have the right to set their own rules and regulations. But still, the financial component plays an important role in decisions to use banking for the unbanked. 

Addressing Distrust of the Banking System

Distrust in banking services has existed since the very moment such institutions appeared. People are afraid to transfer their funds for safekeeping to third parties. Moreover, putting money into deposits or similar programs without the ability to return the funds whenever is scary. 

But still, the world is moving forward, and evolving. Access to digital payments via cell phones or point-of-sale terminals creates opportunities to offer more convenient and less costly ways to make payments.

Introduction to Cryptocurrency: How Can It Help the Unbanked?

Cryptocurrencies are a new reality in the financial world, which is developing at an impressive pace. New, more technologically advanced money is needed to service virtual world payments. Cryptocurrencies as a means of payment will create more and more competition for the usual electronic (mobile, card, etc.) payments. 

Let alone cash, which is unsuitable for the needs of the digital economy. There is a demand and a supply. Why is this option interesting to the unbanked population? 

No Minimum Balance Requirement in Cryptocurrency

Banks often set threshold amounts of money that must come in or remain in a customer’s account. It’s unpleasant or even scares you away from a particular financial institution altogether. Things are different with cryptocurrency. 

People don’t have to worry about any restrictions. You choose how much you want to have in your account, or whether you will be charged a retention fee on your account. Unbanked crypto is an excellent alternative today.

The Advantage of Extreme Accessibility

These days, you can find many platforms that allow you to exchange fiat money for digital funds. They are user-friendly and accessible. You can get your account on the crypto platform within 20 minutes and already have digital money in your balance. A single barrier may be the level of knowledge and skills of the population in the field of crypto. Therefore, make sure you know the basic aspects of digital assets before embarking on this path.

Cryptocurrency: An Identity-Independent Solution

The world of electronic assets doesn’t look at your financial status, or who you work for. It doesn’t care what your credit rating is. To start using USDT, BTC, or any other cryptocurrency, the minimum required is a device like a smartphone or tablet and internet access. That’s it. 

Be prepared to provide proof of your identity in the form of a passport photo or driver’s license. This is basic practice. Besides that, the worry that you won’t fit into the system based on your financial situation is gone for good.

The Unique Aspects of Cryptocurrency

There’s a lot to be said here. Many users have appreciated the main properties of cryptocurrency:

• anonymity
• immutability 
• complete lack of control. 

Virtual wallets are reliably protected by a secret key. Let’s take a look at a few more unique aspects of unbanked crypto. 

Decentralization: A Shift From Traditional Banking

One of the most important distinguishing features of most cryptocurrencies is decentralization. In simple words, it is when the network operation is not supported by a single central authority, but by a huge number of users. All these users are connected to the network at the same time.

Decentralization in the world of cryptocurrencies offers one important advantage. Any interference (public or private) in the network, such as Bitcoin, is impossible. For users, this is extremely important and convenient. That’s why many people today are completely switching to cryptocurrencies.

Enhancing Security and Control Through Cryptocurrency

Blockchain is the underlying technology that secures cryptocurrency due to its decentralized and cryptographic nature. Because decentralization means there is no single point of failure or control, it is unlikely that hackers can compromise the blockchain. 

In addition, all cryptocurrency transactions are recorded in blocks and “linked” in a publicly accessible registry, so it is quite difficult for attackers to alter past transactions without altering any subsequent blocks. In addition, public key cryptography adds another layer of security. These moments pull the unbanked population to their side.

Transparency: An Added Benefit of Cryptocurrency

The system is open: information is available to users, regulators, and law enforcement agencies around the world. In many ways, it is even more open than the traditional financial system. Each transaction in the blockchain is forever followed by a trail of uneditable records. It also allows the risk of money laundering to be analyzed and reported. In this way, the entire financial system is examined, rather than just tracking in and out points.

Cryptocurrency Offering Investment Opportunities

It is hard to deny the rapid development of the crypto market. Cryptocurrency acts as a promising investment asset that brings income in the long term. There are many varieties of crypto, so investing in cryptocurrency should be considered as a source of stable income if you make the right choice.

How Cryptocurrency Can Empower the Unbanked

Here are a few highlights for both the unbanked population and businesses to pay attention to. 

• Cryptocurrencies transcend geographical boundaries and eliminate the need for intermediaries such as banks or payment processors. This feature allows companies to easily reach a global customer base. Crypto transactions are completed quickly, often within minutes, regardless of the location of the sender and recipient.
• Traditional payment methods often come with significant transaction fees, especially for international transfers. On the other hand, your customers will love the benefits of paying with cryptocurrency, which will significantly reduce transaction costs. Because cryptocurrencies operate on decentralized networks, they eliminate the need for intermediaries and associated fees.
• Integrating cryptocurrency into your business demonstrates adaptability and positions your company as one of the early adopters of new technologies. Cryptocurrency payment companies demonstrate a commitment to innovation and attract tech-savvy customers who prefer alternative payment methods.

The Need for Comprehensive Cryptocurrency Education

Many experts would say that the unbanked population does not have an understanding of the benefits of financial services, nor do they have access to devices and technologies. So, why would they choose cryptocurrency? There is a need to educate and notify people about the ease and convenience of digital assets. 

Over the past few years, digital assets have become an integral part of the modern financial landscape, and the words Bitcoin and Blockchain are increasingly heard not at a developers’ conference, but in everyday speech. The rapid growth of the industry puts us in need of an in-depth understanding of the technology, functionality, and operating principles, which is why cryptocurrency education is becoming a key factor for successful participation in the new economy.

PaySaxas Experts’ Perspective on Cryptocurrency for the Unbanked

According to PaySaxas data, about 2 billion people, a quarter of the world’s population, now live without access to the banking system. This means they do not have a bank account that will allow them to open a card or transfer money. The majority of them are in Bangladesh, China, India, Indonesia, Mexico, Nigeria and Pakistan. Given that this is a huge separate market, cryptocurrency can be your connector to this unbanked population.

It is important to realize that having access to financial services is one of the key factors contributing to the development of a country’s economy. With the advent of cryptocurrencies, people have a new tool that opens up access to a variety of financial services. Cryptocurrencies make international transfers much easier and much cheaper. Digital assets do not need intermediaries in the form of banks and their employees.

The Future of Cryptocurrency and the Unbanked Population

The total number of unbanked population in the world is estimated at between 2 and 3 billion people. It is hard to call a niche market that includes more than a third of the world’s population a niche market. That is why we should not expect the fintech market to slow down. On the contrary, it will grow and cover more and more segments of the potential audience, and new products will help to at least partially revitalize the economy.

PaySaxas’ Vision and Predictions

Cryptocurrency could change the way small and medium-sized businesses operate in developing countries, where it is very difficult for entrepreneurs to get a loan to start a business. In addition, small entrepreneurs from developing countries are often unable to participate in import or export businesses because they cannot convert local money into more widely circulated currencies such as the U.S. dollar. 

As a result, they cannot process payments, pay for imports, or purchase foreign equipment. Fortunately for them, cryptocurrencies are already helping to raise funds where it was previously impossible. For example, marketplaces such as Nebeus provide cryptocurrency loans to entrepreneurs in developing countries. 

Other companies like PaySaxas are helping to convert cryptocurrencies directly into fiat money. Therefore, in the new year of 2024, our experts predict greater development of digital assets, as well as their involvement in the lives of the population that does not have access to banking services. 

Conclusion: Assessing Cryptocurrency as a Viable Alternative for the Unbanked

Unfortunately or not, there are still people who do not have access to a bank account. As was said before, the unbanked population refers to adults who do not use or have access to any traditional financial services. There are various reasons for this. 

Fortunately, there are always alternatives. The use of cryptocurrency to settle transactions is becoming a good option for traditional settlement processes. This is due to the ability to settle transactions instantly on the blockchain without having to go through the correspondent banking system with its limited operating time and long processing time. 

Thus, the public can conduct online transactions without banks as intermediaries. It comes out faster, cheaper and there is no need to follow all the rules. 

Final Words from PaySaxas

The PaySaxas team is confident that cryptocurrency is the future. This is the money that will not only help you pay for goods and services, send money to your relatives, etc, these are funds that are an investment. The exchange rate of cryptocurrencies is constantly changing. 

In the future, you can earn great money even just by storing them on your balance. Be more accessible to the world, it is not worth overpaying commissions to intermediary banks. Let’s follow together where the path of cryptocurrencies will take us.