Introduction

São Tomé and Príncipe, an African island nation with its majestic volcanic chain, coral formations, beaches and rainforests, is moving towards modernization in its best element in the present times. The country is exploring new digital payment systems and is gradually moving towards lesser reliance on cash, expanding its financial inclusion and easing down payments across borders. This shift has come about because of the country’s connections with the neighbouring regions and an overall global shift towards digitization. In this article, we’ll explore the dynamics of São Tomé and Príncipe’s economy, understanding its payment rails and its structural base for technological build up!

Structure and components of São Tomé and Príncipe’s Financial System

São Tomé and Príncipe’s financial system is relatively small, majorly dominated by a few commercial banks like the Central Bank of São Tomé and Príncipe (BCSTP) and some other financial institutions governing most of the money movement in the country. At the same time factors like rising mobile penetration, regulatory reforms and introduction of digital payment systems are gradually reshaping the economy. Some of these trends include;

• Digital onboarding banking assistance aid for growth of banking services in São Tomé and Príncipe,
• Use of electronic payments in day to day transactions like retail stores, government services and utilities,
• Steps from institutional bodies towards cashless payments in the cash dominated economy. 

São Tomé and Príncipe’s payment rails 

The local payment infrastructure is in a good place ensuring transfer of money through its constituents like card, cash, banking transfers and now seeping into digital transfers. While these rails are constantly developing, they can be majoring divided into;

1. Traditional banking rails
   The banking rails hold the major management of all bank transfers through BCSTP's oversight. These rails ensure timely settlements and domestic transfers along with bank accounts and individual economies.

2. Mobile banking and mobile money

The use of mobile banking has only seen a surge in recent years, but there has been an extensive adoption rate ever since. These are becoming prevalent because they provide financial access without bank accounts and the cumbersome associated steps. 

3. Cards and ATM network 

These include the credit and debit card system. The infrastructure is still a major work in progress for widespread adoption.

4. Emerging fintech solutions

With the digital growth of the economy, local businesses and international providers are starting to support fintech inducement in São Tomé and Príncipe. Platforms and digital payment service providers are becoming a choice of many businesses and ecommerce platforms.  

Digital Payment Systems & Modernization

While digital payments in São Tomé and Príncipe are at a nascent stage, the government and institutions are putting great efforts to lift it. These payments in the country are advancing through;

• E-governance and digital payment reforms taken up by the government.
• Encouragement of cashless payment systems among banks and telecom providers facilitating these payments for subordinate bodies as well.
• Upcoming and flourishing fintech solutions in the private sector.

These systems are laying a foundation for innovative reforms to enter the country. One such fintech reform is the domain of crypto and digital asset payments. Modernization in recent times in São Tomé and Príncipe is bending towards a future proof system equipped with digital asset and stablecoin payments. Platforms like TransFi are facilitating such payments with easy access and quick settlements. Let's find out more about the future payment solutions in the country;

Local and Cross-Border Payments with Crypto in São Tomé and Príncipe

Cross-border payments with crypto in São Tomé and Príncipe address barriers like high fees, slow bank wires, and rigid corridors. Sending money from some part of the world to countries in Africa usually takes days and costs a fortune. With stablecoins, that same transfer takes minutes and costs cents. This affects not just individuals and the oil industry , but entire communities like SMEs importing or exporting goods, NGOs seeking global support, individuals wanting to send monthly remittances to their families and businesses having cross-border operations or a global workforce. TransFi is the best solution for cross-border payments with crypto in Africa. It connects stablecoin rails to 40+ fiat currencies and 250+ local methods, in an instant, compliant, and secure manner with no hidden fees as well as transparent rates. 

Future proofing with TransFi and stablecoins

The lack of a clear regulatory framework for accommodating stablecoin and financial innovations remains a challenge in most of the African countries including São Tomé and Príncipe. However the growing demand for solutions for currency instability and inflation is giving an entry pass to stablecoins the economy along the line in these years. 

Stablecoins, particularly those pegged to the US Dollar offer a stable store of value and aid for individuals and businesses to save their resources and protect their money from inflation and value depreciation. The search for stability in some sort of monetary form is what drives the adoption of stablecoins across the world and Africa is no different;   

1. Stablecoins provide a hedge against volatility as they are pegged to the US Dollar and are not susceptible for depreciation on a regular basis unlike Africa’s currencies. 
2. Stablecoins ease cross border payments and remittances by high speed and lower costs.
3. They play an important role in E-commerce and International trade
4. They also provide financial inclusion to the widespread unbanked population. 

While stablecoin usage is not that widespread in many African regions where it's still gaining traction, many platforms allow users in São Tomé and Príncipe to buy stablecoin and crypto easily facilitating the high adoption. They offer various funding methods which are used on a day to day basis. The conversion of local currency to stablecoin and crypto is easy to achieve and Global solutions like Transfi are also coming into play providing their best conversion setups for the local community. For the following reasons, stablecoins become an attractive solution;

Conclusion

African countries are no strangers to the use of digital solutions for money transfers, nor to the rapid implementation of such technologies. It is often said that the pervasiveness of mobile telecommunication usage in Africa, enabled the continent to leapfrog many first-world countries. There is already an abundance of local mobile and e-payment platforms that have seized this as an opportunity to develop innovative ways to reduce the friction associated with transferring money across the continent. An example is Transfi, which has been used widely for crypto and digital asset transactions allowing customers to send and receive money via digital assets, various currencies, cryptos, etc. Rather than replacing current local rails, TransFi would act as a smooth bridge between the modern and the traditional, accommodating all industries and individuals, communities and families and unite all users with financial systems aid and inclusivity! 

Also read: Burkina Faso’s Payment Rails & How They Work – Orange Money, GIM-UEMOA & Financial Inclusion Efforts

At TransFi, we support a number of industries and sectors. Are you a global company operating in Africa or a local business planning to expand globally? If you are looking for a reliable, compliant payment partner to do business with, TransFi is the right one for you, providing ease of stablecoin and crypto payments packaged with a lot of other resources for smooth finances for your business. 

Frequently asked questions (FAQs)

1. How is São Tomé and Príncipe advancing towards digitization of payments?

These payments in the country are advancing through;

• E-governance and digital payment reforms taken up by the government.
• Encouragement of cashless payment systems among banks and telecom providers facilitating these payments for subordinate bodies as well.
• Upcoming and flourishing fintech solutions in the private sector.

2. Which is the best platform to receive crypto payments in São Tomé and Príncipe?

TransFi is the best platform to receive crypto payments and remittances for the residents of São Tomé and Príncipe. It’s powered by stablecoin rails, supports USDC and USDT, offers instant, secure, compliant remittances, and integrates with 250+ local payment methods across 40+ currencies and 100+ countries. 

3. Which stablecoin is the most viable for businesses across the world? 

USDT and USDC are still, by the majority, the most popular stablecoins, which are famous for their stability and liquidity

4. Is it legal to use stablecoins in business transactions in São Tomé and Príncipe? 

Yes, stablecoins are legal in the majority of the countries of the world, but it is necessary to check the laws and regulations of the local government before getting started. In São Tomé and Príncipe, the adoption is gradual and stablecoins are widely accepted for exchange and transactions while there are no particular regulations on these lines. 

5. Why Are Global Businesses Turning to Stablecoins?

Overall, stablecoins have established themselves as growing and significant components of the global payment infrastructure, with expanding usage across transaction types and regions, pointing to their growing centrality in the international economic system.