How Kenyan Micro-Task Workers Are Using Stablecoins To Make Affordable Cross-Border Payments

One of the major challenges facing micro-workers globally is the cost and friction of processing international payments to local currencies. Processing a $5 micro-payment from the US to Kenya may cost up to 111% with traditional payments processors and as low as 2.02% with Stablecoin solutions, according to a recent report by Mercy Corps Ventures, the impact investing arm of global development agency Mercy Corps.

By taking advantage of Blockchain technology, micro-workers can reach global markets and earn a living from micro-tasks without the friction of high transaction fees from traditional payments processors. This is helping create jobs for people living in areas with high unemployment levels and driving higher inclusivity in the global job market.

Microtask jobs are often easy tasks that are completed online using a smartphone or computer. These tasks take a few seconds or minutes to complete and earn a few cents to a couple of dollars per task. These tasks may include labeling a product, identifying objects on photos, URL searches, sorting e-mail, proofreading, writing reviews, or testing games. They are highly flexible and can be done full-time or as a side hustle.

Kenya is experiencing significant growth in micro-task workers due to its relatively young population, high smartphone and internet penetration rate, the use of English as a national language, and over 87% literacy rate among 15-24-year-olds, according to data from the UNESCO Institute of statistics.

Rather than getting paid in US dollars, the micro-task workers are preferring to be paid in Stablecoins. Stablecoins are cryptocurrency tokens built on top of an existing Blockchain such as Ethereum or Celo. The Stablecoin value is pegged to the value of fiat currency such as the US dollar. Stablecoins are easier to transfer cross-border as well as store on a mobile wallet.

According to a pilot study by Mercy Corps Ventures on a group of Kenyans providing micro-task services to Appen, a data company for the development of machine learning and artificial intelligence products, Stable coins were identified as the optimum solution that delivers the highest value to the micro-task worker as the transaction fees and speeds are lowest. The workers delivered services to Appen through a micro-working app named Corsali. They were then paid through the same app.

The workers then transferred their earned USD-pegged Stablecoins to a wallet called Valora that runs on the Celo Blockchain at a 0.02% transaction fee. The workers had the option to store and stake their Stablecoins on the Valora wallet for Celo rewards or withdraw. For those that chose to withdraw, they transferred the Stablecoins to Kotani Pay, an off-ramp application that converts Stablecoins on the Celo network to Kenya shillings on an M-Pesa digital wallet ready for spending. Kotani Pay charged them a flat rate of 2% making the entire cost rise to 2.02% for the cross-border payment.

Using traditional means, the micro-task workers would have paid somewhere between $1.44 and $5.55 for the cross-border transaction of $5 from the US to Kenya. Using the Stablecoin approach, they paid $0.101 to process a $5 micropayment.

Innovation in the blockchain space is expected to improve on the transaction fees, especially on the rapidly growing lightning network on the Bitcoin Blockchain. This could help bank the unbanked global population while extending access to remote micro-task jobs that are continually growing year over year.