Why non-custodial wallets are a better fit for informal traders

For many informal traders, digital access has been presented as progress.

Mobile wallets, payment apps, and digital accounts have expanded the ability to receive payments beyond cash. Customers can transfer money instantly. Traders no longer need to hold large amounts of physical currency. Transactions leave a digital trace.

On the surface, this looks like financial inclusion.

But access is not the same as ownership.

And for informal traders, that distinction is critical.

The illusion of inclusion

Over the past decade, financial inclusion has often been measured by access. How many people have accounts? How many can receive digital payments? How many use mobile money?

These metrics matter, but they do not tell the full story.

Many informal traders now operate within custodial systems. Their digital money is technically held on their behalf by a provider. The provider controls the infrastructure, the rules, the limits, and the enforcement mechanisms.

In stable environments, this arrangement may function smoothly. In less stable environments, it introduces a new vulnerability.

The trader has access, but not control.

Access means permission. Ownership means authority.

Why ownership matters more in the informal economy

Informal traders operate without buffers.

They do not have large savings. They do not have access to emergency credit lines. They do not have legal departments to resolve disputes.

If a custodial wallet restricts access due to verification processes, algorithmic flags, policy updates, or compliance reviews, the impact is immediate.

Stock cannot be replenished. Suppliers are not paid. Customers lose confidence.

In formal systems, delays are inconveniences. In informal systems, they are disruptions.

Non-custodial wallets change the location of control. The trader holds their own funds directly. There is no intermediary with discretionary power to freeze or limit access.

This shift is not ideological. It is structural.

The risk of sudden rule changes

Custodial systems operate under centralised governance. Rules can change quickly.

Withdrawal limits may be reduced. Fees may increase. Certain transaction types may be restricted. Accounts may be temporarily locked during reviews.

These measures are often justified by regulatory or security needs. But they disproportionately affect informal users.

Informal traders rarely receive early notice. They rarely have alternative systems prepared. They often discover restrictions at the moment they need funds most.

Non-custodial wallets remove this risk category entirely.

There is no central authority that can change the rules on how a trader accesses their own funds.

Ownership restores predictability.

Ownership as economic dignity

Money is not only transactional. It represents effort, time, and value created.

When access to earnings depends on a third party's approval, autonomy is reduced.

Informal traders value independence. Many operate informally precisely to maintain flexibility and avoid rigid institutional structures.

Non-custodial wallets align with this mindset.

They allow traders to receive, hold, and transfer value without asking for permission.

This restores a level of dignity that custodial systems quietly erode.

The concentration risk of custodial models

Custodial wallets centralise risk.

If a provider experiences technical failure, regulatory intervention, liquidity stress, or cybersecurity issues, all users are affected simultaneously.

Informal traders are rarely diversified across multiple providers. They often rely on a single platform.

This creates a single point of failure.

Non-custodial wallets decentralise this risk. Each wallet operates independently. Control is distributed rather than concentrated.

This structural difference increases resilience.

Control does not mean complexity

A common concern is that self-custody introduces complexity.

In reality, modern non-custodial wallets are designed for usability. Traders do not need to understand the underlying technology. They interact with a simple interface that shows balances and enables transfers.

The difference lies beneath the surface.

Control sits with the trader. The wallet is a tool, not a gatekeeper.

This distinction becomes more important as digital money becomes central to everyday trade.

Why informal traders are uniquely exposed to custodial power

Large businesses can navigate custodial systems strategically. They maintain multiple accounts. They negotiate with providers. They absorb temporary disruptions.

Informal traders cannot.

Their entire operation may depend on a single digital wallet. A freeze of even 48 hours can halt operations.

Ownership removes this asymmetry.

The trader does not depend on the goodwill, policy shifts, or technical stability of a single provider.

They depend only on their own wallet access.

This reduces structural vulnerability.

Building a foundation for saving and growth

Without ownership, saving becomes fragile.

Savings held in custodial accounts remain exposed to the same risks as daily transaction funds. If access is restricted, savings are locked.

Non-custodial wallets ensure that savings remain accessible at all times.

This foundation is necessary before advanced features such as stablecoin savings or yield can make sense.

Ownership comes first. Growth follows.

Reducing psychological stress

Economic instability creates mental strain.

When traders worry that funds might be frozen or restricted unexpectedly, it affects behaviour. They withdraw funds quickly. They avoid holding balances. They operate defensively.

Ownership reduces this cognitive burden.

Funds remain accessible. Rules remain constant. The mental energy spent worrying about system behaviour can instead be directed toward customers and trade.

Psychological security is a real economic benefit.

Ownership does not eliminate responsibility

It is important to clarify what ownership does and does not mean.

Non-custodial wallets place responsibility on the user. Private keys or recovery phrases must be protected. Security practices matter.

But responsibility is different from dependency.

In custodial systems, users are dependent but not responsible. In non-custodial systems, users are responsible but independent.

For many informal traders, independence is preferable.

Aligning with the informal economy's structure

The informal economy thrives on autonomy, flexibility, and peer-to-peer relationships.

Traditional finance often imposes rigid structures that clash with this reality.

Non-custodial wallets fit more naturally into informal environments. They do not require formal employment documentation, credit histories, or institutional approval for basic functionality.

They allow trade to remain flexible while money becomes more reliable.

Ownership is the first layer of true inclusion

Financial inclusion should not mean controlled participation.

It should mean the ability to participate fully, with agency.

Non-custodial wallets provide this agency.

They shift power from platforms to users. They reduce concentration risk. They restore autonomy.

For informal traders, ownership is not a luxury feature. It is the foundation on which resilience, saving, and growth can be built.

What comes next

Ownership becomes most valuable during stress.

In Part 2, we will examine how non-custodial wallets protect informal traders from system failures, outages, and account freezes, and why resilience is just as important as access.