Open and Decentralised Payment Network from Stellar used to boost Remittance inflow amidst Covid-19 pandemic.

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For any country, Remittance is quite a major source of cash inflow. The million African migrants who are living overseas, sends over $30 billion in remittances to Sub-Saharan Africa each year. Besides helping households pay for housing, healthcare and education, the cross-country transfer of funds also boosts foreign reserves, and GDP of developing countries, like Nigeria and thus, benefits such countries.


New data from shows that there is a significant drop across the world in the flow of remittance, owing to the continuous spread of the Covid-19 pandemic and the resultant economic crisis.


Remittance flows to low and middle-income countries (LMICs), according to the world bank, are projected to fall by 7%, to $508 billion in 2020, with further decline of 7.5%, to $470 billion following in 2021.


As remittance flow from abroad dropped to its record lowest since 2008, Nigeria was hit really hard. And in response, a platform to host fintech companies that can help with increased flow of remittance into the country is therefore being provided by Stellar, an open-source and decentralized payment network.


Stellar Network has hosted a number of companies and payment gateways across 10 countries over the last six years. As of now, hundreds of thousands of dollars are transacted by some of the companies on the network.

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Stellar Network

Stellar has several other features, besides hosting fintech companies, that can help resolve the issues affecting remittances in Nigeria and around the world.

Senior Strategist of Ecosystems at the Stellar Development Foundation, Lisa Nestor in a blog chat explained that the high cost of creating a remittance infrastructure is removed by Stellar, and that the network offers free  launch of a remittance infrastructure which  is  very much easy to use. According to her,this  helps companies to focus their time and capital on building more locally made products and also develop experiences for their users.

In addition, The network supports a variety of payments for transactions like Bitcoin. Also, is very fast and cost-effective.


Cowrywise Integration – Anchor

There are several companies using Stellar's Network in Nigeria. The exact number according to Lisa, is not known because it is an open network.

She however, listed Cowrywise as a major Nigerian Fintech Company which has its payment system built on Stellar’s network. She  explained that Cowrywise is an Anchor, a payment bridge that serves as a link between the Nigerian Inter-bank Service System (Nibss) and Stellar.

She explained further that the bridge – Cowrywise integration is basically open-source to enable the use of the integration by other companies to effect transactions such as  cross-border payments or remittance in Nigeria.

On the Stellar network, there are at least six companies using cowry integrations currently  and some of them handle remittances from Europe, South Africa to Nigeria.


How Stellar Network Works

A country can have several anchors which aid payments. The decentralised exchange and built-in liquidity functionality of Stellar enables a company to select the integration of an anchor or become an anchor for payments.


The anchors serves as bridges between the indigenous payment system and the Stellar network. In a case of sending remittance from the US, the fund goes from the ACH to an anchor in the Stellar Network, and from the network, it passes to an actor in Nigeria like Cowrywise before it finally gets into a bank account.


Each anchor in this way, takes care of the regulations and compliance required for transaction and payments in their country, which makes the remittance transfer both easy and time-effective.
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Security – Fraud protection

Stellar is not only fast, it is also a secure means of remittance. Lisa explained that because the platform leverages other platforms like Cowry or Finclusive – technically users go through licensed financial institutions to execute payments on the network.

Besides being fast, Stellar is also a secure medium of remittance. Lisa explained that to execute payments on the network, users go through licensed financial institutions.

She further noted that layers of security have been added by these financial institutions and that they also execute precautionary measures like a KYC – Know your customers and KYB – Know your business.

The network is also transparent, making it possible for payments ledger to be seen easily and also monitored to determine when a transaction was effected from the beginning to the end.


Lisa however, disclosed that there are other constraints that was still being worked on like credit card fraud.


In a conclusion, total recovery of remittances in Nigeria is actually not feasible for now, with the effects of the pandemic still largely felt. According to the world bank forecast, there will be continuous decline into next year. However, with the availability of vaccine and recovery of the global economy, Lisa believes there would be a positive turn


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