Bitcoin Is ‘a Mechanism of Money Transfer Rather Than a Currency in and of Itself’

South African payments gateway PayFast added bitcoin as a payment method on its platform, partnering with the BitX exchange and allowing buyers to make purchases using bitcoin at over 30,000 online sellers

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Bitcoin Is ‘a Mechanism of Money Transfer Rather Than a Currency in and of Itself’

South African payments gateway PayFast added bitcoin as a payment method on its platform in July of last year, partnering with the BitX exchange and allowing buyers to make purchases using bitcoin at over 30,000 online sellers, who receive the South African currency rand in return.

CoinTelegraph caught up with PayFast Managing Director Jonathan Smit to find out how it was going so far and what the future holds for bitcoin in Africa.

PayFast Managing Director Jonathan Smit

CoinTelegraph: What was behind the decision to integrate Bitcoin?

Jonathan Smit: At PayFast we consider ourselves to be forward thinking and have a desire to positively contribute to the ecosystem. The decision was largely experimental and not predominantly driven by a clear business case.

“As far as bitcoin is concerned, remittances are far more interesting due to their transfers being virtually instant and borderless, which is very useful for money transfer of which there is a great need in Africa.”

CT: Is there a genuine desire for it on the part of consumers and merchants?

JS: Bitcoin adoption is largely consumer driven and we wouldn't say that there is a huge desire for it on the part of either consumers or merchants, as it is still very niche insofar as payments are concerned.

CT: How easy is the integration process?

JS: With PayFast, there is no additional integration required. If you are already a PayFast merchant, bitcoin is merely another payment method which can be switched on with no additional work required. If you're not a PayFast merchant, one simply needs to integrate with PayFast and all our payment methods become available including credit cards, debit cards, Instant EFT, Ukash, Mobicred and bitcoin.

“[Bitcoin] more and more is being used a mechanism of money transfer rather than a currency in and of itself.”

CT: What has uptake been like?

JS: Bitcoin usage has been pretty consistent since our launch; not big numbers, but consistent. It currently represents approximately 0.25% of our payment volume.

CT: How big an impact could Bitcoin have on payments in Africa?

JS: We believe that as far as bitcoin is concerned, remittances are far more interesting due to their transfers being virtually instant and borderless which is very useful for money transfer of which there is a great need in Africa. As far as payments go, people in Africa largely still transact in cash and what will drive adoption of more electronic payment mechanisms is the rollout of traditional banking and card services in Africa.

Bitcoin is interesting and represents interesting possibilities, but it is still largely in the domain of a limited group of technically minded individuals and more and more is being used a mechanism of money transfer rather than a currency in and of itself.

“Growth will be dependent on how well the mass consumer market will be educated or made aware of cryptocurrency, specifically bitcoin. At the moment, bitcoin is utilised by a very niche market of so-called ‘early adopters.’”

Cape Town

CT: Do you foresee growth in terms of Bitcoin usage generally and on PayFast?

JS: We think that growth will be dependent on how well the mass consumer market will be educated or made aware of cryptocurrency, specifically bitcoin. At the moment, bitcoin is utilised by a very niche market of so-called “early adopters” and the problem here is that the general public are either unaware of, or don’t understand Bitcoin and how it fundamentally works.

As people learn more about bitcoin and become more aware of cryptocurrency, in general, we believe that it will instil a level of trust in consumers to the point where they are willing to utilise it as a payment method.

Part of this process should come from more merchants adopting Bitcoin as a payment method, for two clear reasons:

  1. The more places consumers can make use of Bitcoin as a payment method, the more incentive there is for consumers to actually use Bitcoin.
  2. If a consumer sees that their trusted merchant is utilising Bitcoin as a payment method, then they would be more inclined to trust Bitcoin

CT: Do you have any concerns over security?

JS: There are security concerns with Bitcoin, but these have less to do with the protocol itself and more to do with people and services handling and storing Bitcoin. The concerns that we would have relate to wallet security and the fact that Bitcoin payments are irreversible. 

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