Old but gold

Old-School Coins Power An Unusual Digital Banking Niche In South Africa

By  |  February 22, 2022

In a world where cryptocurrency, DeFi, and web3 apps are hoarding all the buzz around the future of global finance, a 6000-year-old concept appears to be looking to reinvent itself in South Africa.

South Africans have an estimated ZAR 300 B (~USD 20 B) in Krugerrands hidden in drawers and safes, unaware that they could be using the value of their gold to fund day-to-day financial transactions. And one ambitious tech-powered solution wants to change that through an effort that has the makings of a marriage between the old school and the new cool.

Krugerrand is a South African gold coin with a portrait of President Kruger on the obverse, they were first minted by the Republic of South Africa in 1967 to help promote South African gold to the international markets and to make it possible for individuals to own gold. South Africa is famously home to some of the world’s largest gold mines and accounts for approximately 4.2 percent of the world’s production of the precious metal

Today, Krugerrands are among the most frequently traded gold coins in the world market, according to Investopedia. They derive their value from the price of gold at any one time. At the time of writing, 1 ounce (oz) of the Krugerrand is equivalent to around USD 1.9 K. And an ambitious but unusual deployment of tech is looking to put that money to work.

South African fintech, Troygold, allows gold owners to upload and digitise their physical gold and then use it for transactions and finances. Customers receive an ownership certificate and can then save, spend and borrow against their gold bullion via a mobile app and Mastercard debit card. The gold storage and insurance are free of charge.

Troygold was co-founded in 2018 by brothers Bastiat and Dane Viljoen, both of whom have boast experience in investment banking and gold mining itself, having acquired a gold mine out of liquidation The startup announced a funding round led by Crossfin Ventures, which claims to have built a portfolio of companies that collectively process more than USD 5 B in point-of-sale transactions annually from over 152 million transactions across more than 20,000 retail stores and 38,500 clients.

Troygold CEO Bastiat explains, “Gold is history’s most stable money in terms of maintaining its value and purchasing power over time. Krugerrands used to be stored at safety deposit boxes in bank branches, but frequent robberies made the practice too risky and banks stopped offering the service. Most South Africans who own gold Krugerrands are stashing these at home in safes and drawers, which is a security risk. Troygold offers a superior solution where owners maintain full legal ownership of their Krugerrands, but with security at no charge and easy access to increased financial liquidity.”

The process seems generally straoghtforward: users download the app and deposit their Krugerrands by taking them to the closest drop off point like Scoin Shops or if the user has more than 20 coins, Troygold will arrange for secure collection. Using the Troygold mobile app, users can then trade any amount of gold 24/7, getting instant liquidity on their gold holdings. 

The physical gold is denominated in Rands, which is loaded onto a Troygold Mastercard linked to a physical cheque account at Access Bank, the sponsoring bank. If the customer doesn’t want to sell their gold, they can enjoy a gold loan facility to allow them to utilise the value inherent in their gold holdings without selling their gold. It seems like a neobank of sorts, serving up gold-backed digital banking.

“Troygold account holders can instantly access cash by way of a loan facility to the value of 75 percent of their gold holdings.The funds in the loan facility can be spent anywhere Mastercard is accepted or the value can be transferred to another bank account,” says Viljoen.

According to the company, there are no monthly account fees with a Troygold account but there are standard transactional fees associated with the Troygold Mastercard. The gold-backed loan facility has monthly interest rates from as low as 1.25 percent. 

Troygold also maintains that all customer holdings are fully insured against loss or theft and gold holdings are audited monthly. Troygold’s technology gives each gold coin a unique identification number when it is added to the vault storage so that ownership is never in question.  

 “Gold has outperformed the Rand by an average of 14 percent each year over the last 50 years, according to an Old Mutual study. As our currency continues to lose value, the benefit of storing, transacting and growing your wealth in real gold is a no-brainer,” says Viljoen.

Troygold is currently only available in South Africa, but the company plans to expand internationally. The company says it is registered as a Krugerrand dealer with the South African Financial Intelligence Centre (FIC) of the South African Reserve Bank (SARB, as well as a registered credit provider with the National Credit Regulator and an appointed juristic representative for financial services provider, Prime Advisory Services.

Featured Image Courtesy: istock

Most Read


“Loans For Phones” Look To Right The Many Wrongs Of Digital Lending In Kenya

Smartphones tend to be wrapped in a brand of marketing that makes them


Post-pandemic, African Logistics Startups Recalibrate To Defy All Odds

The hurdles associated with the transportation of merchandise across Africa, not unlike the


Botswana: A Veiled Tech Wetland Looking To Fling Wide Its Floodgates

Per Partech’s 2021 report on venture capital investments into African tech, funding into