This article was contributed by Paschal Okeke, Head of Ops & Expansion at CrissCross, and Gwera Kiwana – Expansion & Partnerships, Avian Labs as part of the Emerging Trends in Cross-Border Payments: A Growth Guide for Stakeholders report authored by Aroghene Favour Ndulu and Paschal Okeke.
What technologies are currently underutilised in Africa’s cross-border payment systems? The two answers that come to mind are blockchain and multi-currency account APls.
Blockchain adoption has been slow partly due to regulatory and compliance challenges and the volatility of cryptocurrencies. Governments and financial institutions are still developing frameworks to regulate and monitor blockchain payments. Stablecoins have majorly solved the problem of volatility.
Blockchain makes cross-border payments cheaper, faster, and more secure. Unlike traditional payment options, blockchain payments do not require intermediaries, and no single “organisation” is in charge. Every transaction is encrypted with a public record.
Multi-currency account APls allow fintechs to create bank accounts for their merchants or end-users through partnerships with other financial institutions. These accounts will increase borderless payments’ ease through increased liquidity access. Sadly, this infrastructure is only present or mature in a few African markets- Nigeria, Ghana, and Kenya.
If businesses had access to multicurrency accounts across Africa, currency exchange would be cheaper, settlements would be faster, and reconciliation would be easier. The entire FX operations will be smoother, and by extension, borderless trade will benefit it.
Leveraging AI to combat fraud
One everyday familiar use case is using Al for transaction monitoring. Machine Learning (ML) algorithms can monitor spending patterns and flag suspicious behaviours. These algorithms can help prevent identity theft, card theft, and phishing attacks. Al can also be used to build risk profiles, verify documents’ authenticity and improve due diligence.
APIs and integrating cross-border payment solutions
APls help to singularise operations. If a company provides settlements in 100 countries, it needs liquidity partners, brokers, and some sort of operation in those countries. APls make this easy. With APls, a business can easily offer multiple payment options, currencies, and geographies- balance and reconcile its treasury.
APls mean you don’t need to start from scratch. One use case is using APls to access real-time exchange rates. This access protects transactions against the risk of fluctuations. APls also help with interoperability because most multi-currency desks have to connect with multiple brokers underneath the hood.
Stablecoins and cross-border payments in Africa
Stablecoins make remittance faster and cheaper. Stablecoins offer a seamless user experience for currency transfers.
Imagine you travel to the Maldives; with one straightforward exchange, you can convert your naira to USDC and then to Rufiyaa (Rf) to pay for food, hotel, or transportation without needing to source Rf or access bureau de change locally. It is fast and efficient. Stablecoins provide an avenue to get real value for the dollar in emerging countries
Interoperability in payment systems
Interoperability in Africa is a mirage. You need to build your product to suit your audience and resources. Imagine trying to build solutions for WhatsApp (OTC) transactions. There is no global standard.
As an organisation, you must create interoperable solutions based on the market’s needs, especially emerging markets.
The organisations that can hack interoperability are the traditional banks. They have the assets, data, and resources to provide an integrated borderless payment service. Some banks are already working towards this, and it will be interesting to see how they perform in the future.
You can read the full report here.
__________________
Paschal Okeke– Head of Operations at CrissCross- a cross-border payments company leveraging modern blockchain and fiat technologies. He has over nine years of experience leading global operations at companies like Binance and Bolt.
Gwera Kiwana– Expansion & Partnerships, Avian Labs. Gwera is a fintech and web3 expert who focuses on where both intersect. With years of experience building and scaling global fintech companies, she’s now driving global expansion and partnerships at Avian Labs for Sling Money.
