This article was contributed by Dickson Nsofor, CEO Kora, and Solomon Amadi, SVP of Payments at Moniepoint as part of the Emerging Trends in Cross-Border Payments: A Growth Guide for Stakeholders report authored by Aroghene Ndulu and Paschal Okeke.
The “Japa” trend is one of the significant drivers of cross-border payments at the moment. With more people moving abroad, especially to the Western world, there’s a growing need to send and receive money back home. Another key trend shaping the cross border payments ecosystem in Africa is the rise of mobile money platforms like M-Pesa and Momo, which are helping unbanked populations send and receive payments across borders.
Nigeria’s economy is also pushing businesses to look beyond local markets. FX gains are becoming more appealing, and earning in stronger currencies is now a priority. Exporters, for example, ship goods to other African countries and beyond, while importers bring in funds. This has increased the demand for cross-border payment systems that handle these transactions.
For businesses, operating across borders isn’t just about trade; it’s a way to grow. Expanding internationally gives them access to new customers and more revenue opportunities. Fintech companies are stepping up with APl-driven platforms that provide cheaper and more efficient payment solutions, disrupting the traditional banking model. And let’s face it, a business that can succeed in multiple markets is far more attractive to investors.
How is blockchain impacting cross-border payment solutions on the continent?
Blockchain technology is still in its early stages regarding cross-border payments in Nigeria and much of Africa. A few local companies, like Zone, are experimenting with blockchain to facilitate transactions, but the overall impact on cross-border payments is minimal. The reasons are clear: adoption and penetration are low due to regulatory uncertainties, negative perceptions, and a lack of widespread advocacy for blockchain-driven solutions.
Blockchain is making cross-border payments in Africa faster, cheaper, and more secure. In the past, payments had to go through multiple banks and intermediaries, which caused delays and extra fees. But with blockchain, transactions happen directly between two parties in real-time, eliminating the need for these intermediaries. This is a big deal for African businesses and individuals who rely on fast and affordable payments. Plus, blockchain keeps every transaction on a secure, tamper-proof ledger, which makes fraud much harder.
Over time, blockchain will help African countries rely less on foreign currencies and make it easier to trade using local currencies.
The role of mobile money
Mobile money has transformed access to financial services for people without traditional banking, allowing them to send and receive money directly through their phones. This has brought millions into the financial system. However, its impact varies across countries due to differing regulations.
For example, in Kenya, M-PESA allows telcos to store customer funds, which makes them integral to the financial ecosystem. But this comes with risks; if a platform like Safaricom’s M-PESA were to face disruptions, it could cripple Kenya’s economy. On the other hand, Nigeria has taken a more cautious approach, with regulations that prevent telcos from storing funds.
This helps avoid over-dependence on any single platform and safeguards competition from fintechs. Intra-African payments are another area where mobile money plays an important role. It can facilitate cross-border transfers, but issues like transaction limits, payment tracking, and data privacy must be regulated first.
Telcos collect extensive user data, which could create an unfair advantage if left unchecked. Ultimately, mobile money simplifies transactions and ensures people can send and receive money effortlessly. While it’s unlikely to dominate Nigeria’s financial system the way M-PESA does in Kenya, it will remain a vital transaction option.
For customers, the priority is convenience, whether through telcos, banks, or fintech. The goal is to make payments faster, safer, and more accessible.
AfCFTA and cross-border payments
African cross-border payments will change significantly under the African Continental Free Trade Area (AfCFTA). The agreement opens the door to a more extensive customer base and growth opportunities for businesses already in the payments space. It also encourages the use of local African currencies, which could reduce Africa’s heavy reliance on international currencies like the US dollar.
However, If we can develop systems to exchange African currencies directly, without the restrictions many African countries currently face, we could see significant innovations in how payments are made across Africa.
This shift could also help stabilise and increase the value of local currencies by creating more demand for them in regional trade. The ultimate goal is to make cross-border payments more manageable and reduce dependency on foreign currencies, which can weigh down trade due to currency conversion costs and rate fluctuations.
If it works as intended, AfCFTA will simplify trade and boost intra-African commerce and innovation in the payments ecosystem.
Future innovations
Al will play a huge role in shaping the future of payments in Africa. With advanced fraud detection and smarter risk management systems, transactions are likely to become faster and more secure.
Digital currencies, including cryptocurrencies and central bank digital currencies (CBDCs), also have the potential to reduce transaction costs and speed up cross-border payments by cutting out the need for foreign exchange.
Contactless payments will transform how people pay in Africa in the next few years. Imagine being able to use your Nigerian card in Morocco without any hassle. That’s the kind of simplicity we need. The rise of virtual cards will help push this forward.
They’re cheaper to get, you don’t have to worry about losing them, and they’ll make payments faster and more secure. Pair that with contactless technology, making it much easier for people to pay without thinking twice.
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Dickson Nsofor is the founder and CEO of Kora, a pan-African payment infrastructure company established in 2017. He has over a decade of experience in Internet and mobile technology companies, where he honed his skills in IT, business analysis, and project management. He has contributed to organisations such as the United Nations and Humaniq, focusing on improving processes and implementing innovative solutions
Solomon Amadi, SVP of Payments at Moniepoint Group. He has over a decade of experience in the fintech industry, with a background in software engineering, products, and business, and he has an MBA from the University of East London.
