Cash no longer king: cross-border payments in Africa

May 2025  |  FEATURE | BANKING & FINANCE

Financier Worldwide Magazine

May 2025 Issue

The African payments industry is in transition. While offline payments continue to dominate, online payments, underpinned by digital innovation, are experiencing significant growth, their value forecast to reach $611.20bn in 2029, according to Statista.

Of particular note within the online context is the cross-border payments market (estimated to be worth around $54bn in remittances to Sub-Saharan Africa alone), which is increasingly pivotal for African companies looking to expand their global footprint, enhance competitiveness and streamline financial operations.

“The majority of cross-border transactions in Africa have traditionally been cash-based or informal, moving through fragmented networks of remittance providers, traders and mobile money operators,” says Bernard Ghartey, a principal at Norrsken22. “However, the rise of mobile money adoption, particularly in East and West Africa, is transforming this landscape.”

For example, small retailers in Accra or freelancers in Nairobi can now receive and send money instantly, without a bank account – just a phone and a SIM card. Moreover, digital remittance players are enabling faster, more affordable transactions by connecting mobile wallets and digital accounts across borders, making it easier for the African diaspora to send money home and for individuals to access financial services.

“For larger enterprises, mobile money still faces limitations, particularly around foreign exchange and transaction caps,” continues Mr Ghartey. “This is where cross-border payments platforms step in, unlocking more efficient access to foreign exchange, enabling businesses to pay international suppliers and conduct cross-border transactions more effectively than through traditional banking methods.”

Catalyst for growth

According to 2024 analysis by Duplo – ‘How Cross-Border Payments Drive African Business Growth’ – cross-border payments are an essential catalyst for growth for African businesses, for the reasons outlined below.

First, they facilitate international trade and market expansion. Expanding into international markets is a primary growth strategy for African businesses, but it requires smooth financial transactions across borders. Cross-border payment solutions provide African businesses with a bridge to trade internationally, bypassing traditional banking challenges such as high fees, currency exchange complications and delayed transactions.

Second, they improve cash flow and operational efficiency. Cross-border payments enable African companies to maintain better cash flow by shortening payment cycles and reducing the time spent on complex transaction management. Traditional banking channels can take days, even weeks, to process payments internationally. By adopting fast, digital cross-border payment solutions, companies can ensure quicker access to funds, enabling them to meet operational costs and reinvest capital promptly.

Third, they reduce currency exchange risk. Currency exchange rate fluctuations are a significant risk factor for African companies transacting globally. Cross-border payment providers often offer hedging options or allow companies to lock in exchange rates, protecting them from volatile currency markets. By leveraging these tools, African companies can stabilise pricing and better forecast financial performance in international markets, thus supporting sustainable growth strategies.

Fourth, they enhance competitive advantage with technological solutions. Digital advancements in cross-border payments give African businesses access to real-time insights, automated invoicing and compliance checks. This technological edge is invaluable in maintaining a competitive position in both local and global markets. Integrating robust, tech-driven payment systems can also help reduce the administrative burden and allow businesses to focus on high-value financial planning.

Lastly, they support African Continental Free Trade Area (AfCFTA) initiatives. The AfCFTA aims to enhance intra-African trade by reducing tariffs and facilitating easier cross-border transactions. Companies can be at the forefront of the AfCFTA movement by adopting payment solutions that meet compliance requirements while facilitating faster, lower-cost transactions within Africa. This adoption not only aligns with the broader goals of AfCFTA but also enhances Africa’s standing in global trade networks.

“Speed, cost-efficiency and accessibility are the biggest advantages,” adds Mr Ghartey. “FinTech-driven solutions like mobile money, digital wallets and blockchain-based payments – typically via stablecoins – offer faster settlements and lower fees. Digital-first platforms have made it easier for African businesses to process payments from global customers, unlocking new revenue streams.

“For global merchants, the ability to collect payments from multiple sources beyond bank cards has unlocked entirely new markets,” he continues. “Platforms can now sell directly to African consumers and repatriate funds seamlessly. At the same time, African creators and small merchants can now sell globally. A Nigerian freelancer, for instance, can accept US dollar payments and cash out in local currency into their mobile money. This was nearly impossible a decade ago.”

Loosening constraints

While leveraging efficient cross-border payment solutions is undoubtedly helping African companies to solidify their presence in global trade, significant challenges remain, including regulatory fragmentation, foreign exchange volatility and a lack of interoperability.

“Foreign exchange constraints and unstable local currencies further complicate transactions, making them unpredictable,” concurs Mr Ghartey. “At the same time, payment systems, such as mobile money, banks and FinTech platforms, remain largely disconnected, forcing businesses to navigate multiple rails to move money.

“What Africa needs is regulator-led interoperability,” he continues. “If central banks could collaborate on a unified licensing framework and improve foreign exchange liquidity, cross-border payments would become faster, cheaper and more scalable – unlocking true intra-Africa commerce. Right now, we are operating as a patchwork rather than a connected ecosystem.”

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Fraser Tennant