This week, Bitnob, a crypto-powered money platform, announced an integration with the Universal Money Address (UMA) protocol. UMA adopts email technology to enable the borderless and digital movement of money as both crypto and fiat. Though relatively new, experts suggest this technology has the potential to fundamentally shift how Africans interact with money, especially across the continent's borders. Bitnob’s CEO, Bernard Parah, is one of these UMA hopefuls.

“With UMA, we're bridging the gap between Africa and the rest of the world, offering our users unparalleled access to global markets," Parah said in a statement seen by NODO. The CEO believes he’s on to something that could revolutionize the movement of money on the continent, and touts his startup as the first in Africa to adopt this “revolutionary payment protocol.”

Excitement and adoption of UMA in Africa are low, but the global network of UMA hopefuls—and the promise of the protocol—positions it as a development worth monitoring. Lightspark, the company behind the project, is led by David Marcus, Paypal’s former president and co-creator of Facebook’s crypto project, Diem. The founding team comprises ex-Paypal and Meta employees, including Christina Smedley, Kevin Hurley, and Tomer Barel. With decades of experience across global fintech and Big Tech, the expert team has aligned behind a common goal: make money interoperable and borderless.

The promise of a borderless money protocol

UMA is essentially a global settlement layer built on top of Bitcoin’s Lightning Network. Think Nigeria’s NIBSS, Brazil’s Pix, or India’s UPI—which is also making inroads into Africa. These systems are central bank-backed and allow for instantaneous money settlement across participating banks. But they largely remain regional or require extensive collaboration to scale. UMA wants to disrupt this by leveraging the transaction speed of Lightning to move money through emails, one of the most friendly options for users globally. Lightning Network processes about 1,000 transactions per second.

“In America, where I am from,” said Marcus in a recent conversation on X, “there’s so much reliance on big fintechs like Venmo and Cashapp, but these apps remain centralised and interoperable. That’s not how money should move in 2023.”

For UMA’s builders, the protocol’s success is in its integration with financial institutions, crypto exchanges, and global wallet products. This play will create a global corridor for a low-cost money movement across economies of the world, facilitated by Bitcoin technology.

Some banks and exchanges across the world have integrated UMA and are driving awareness of the protocol. These include Latin America’s leading financial payments company Ripio, Brazilian crypto firm Foxbit, Gibraltar-based digital bank Xapo, and Southeast Asia’s leading crypto platform, CoinsPH.

Can UMA scale in Africa?

Bitnob’s Parah expressed strong confidence in the protocol’s ability to solve cross-border payment hassles for Africans. However, the novelty of the solution makes it rather difficult for other experts to weigh in. A high-level executive at Yellow Card told NODO that the crypto exchange may refuse to comment publicly to prevent any perception of them trailing in the industry. “I’m just hearing about this, but I believe we’ll look into it soon,” the executive said, requesting to be anonymous.

For UMA to witness genuine adoption in Africa, its strategy to engage African banks will require meticulousness, especially within the broader context of pervasive crypto aversion among financial institutions and government authorities. However, this scenario is not unique to Africa, as the United States faces a similar issue where crypto firms suffer from a lack of partner banks. For Marcus and his team, the solution to this is in their protocol's inherent compliance frameworks. UMA will require integrators of its technology to be regulator-compliant in their regions; a move that shows their willingness to align with the formal banking system, even if it requires relinquishing some long-held accolades of decentralisation and anonymity.

The reality is that Africans are familiar with instant transfers, and UMA will not significantly upgrade that experience. In Nigeria, for instance, fintechs like Opay offer money transfers that reflect in as little as ten seconds. While conventional banking applications may take longer, a NODO survey found that the average time for such transactions is approximately two minutes. Similarly, in African regions where payments are mainly driven by mobile money operators, such as Kenya’s M-Pesa and Senegal’s Wave, payments are near-instant and mostly seamless.

UMA's true impact becomes most evident when it successfully disrupts the cross-border movement of money across Africa's 54 diverse countries. While outsiders might perceive Africa as a single entity, the reality is far more intricate. It consists of a complex web of nations with often disjointed interactions, particularly in terms of trade, logistics, and financial transactions. In practice, the majority of intra-African transfers are conducted in US dollars and tend to flow outside the continent.

Simultaneously, receiving remittances within the region can be a cumbersome and costly process, sometimes incurring fees as high as 27%. Despite the growing number of fintech and crypto-powered solutions to these challenges, a comprehensive, scalable, and regulatory-compliant solution that offers speed, interoperability, global connectivity, and affordability has remained elusive. This is precisely the void that UMA aims to fill on the African continent. If effected correctly, this solution could work in collaboration with government-backed programs like the Pan-African Payment and Settlement System (PAPSS) and the African Continental Free Trade Area (AfCFTA), which are reported to be increasing intra-African business transactions; albeit at a slow implementation rate.

UMA will have to approach Africa with a keen awareness of its complex regulatory landscape, where policies can differ significantly between nations. The success of this project on the continent will hinge on forging partnerships not only with traditional financial institutions but also with regulators and government bodies to ensure their necessary buy-in. Additionally, Marcus and his team must consider the practical challenges that the continent poses, such as inconsistent access to the internet and smartphones, which may convey that emails may not be best suited for the continent. Mobile phone numbers may offer a comparative advantage here, as there are over 650 million mobile users on the continent, according to a UN report. By itself, the UMA protocol holds promises to bring unity to a fragmented financial system and trigger economic inflows. But as the saying goes, the devil is always in the execution.