Innovative Payment Solutions Can Spark Africa’s Cross-Border Trade Boom — If We Act Fast

While technology is introducing solutions that are eliminating some friction in the process, corporates and small businesses alike are still looking for solutions that provide cost-effective, faster transaction settlement, that is transparent and final and does not compromise the client proposition or experience.

The region has long contended with complex, fragmented payment systems that hinder trade flows between its nations and global partners. With 54 countries, over 40 currencies, and numerous regulatory environments, the complexity of doing business across borders is evident. The slow and often opaque nature of traditional cross-border payment systems compounds the problem – slowing the continent's ability to develop robust regional value chains. With African countries set to dominate the world’s top 10 growing economies, the potential for trade is immense.

Transaction costs, particularly, are still a concern given the multiple touch points and disparate infrastructure that exists for their settlement. A recent IMF report shows that the cost to send a low-value cross-border payment can be as high as 30% in Sub-Saharan Africa. In addition, the inability to settle transactions near real-time and constraints faced with foreign currency availability remains a concern for cross border payments.

But challenges breed innovation, especially in a region as resilient as Africa. The continent is already the world’s leader in mobile banking in terms of live services, subscribers, and transactions – and is home to nearly half of the world’s mobile banking services and two-thirds of global transaction volumes and value. Now, Africa is also pioneering innovative payment solutions, proving that it has the capacity to overcome systemic barriers and reshape how cross-border trade is conducted.

For example, mobile money has been one of the continent’s most profound financial innovations, increasingly being adapted for cross-border remittances and payments as a low-cost, accessible alternative for businesses and individuals moving smaller sums in a region where many people remain unbanked. Its initial and primary utility is predominantly in the peer-to-peer space, which typically involves low-value, high-volume transactions. Expanding this to include larger business-to-business payments at scale, must be prioritised.

When it comes to high-value transactions between businesses or banks, more robust systems are required. Cross-border real-time gross settlement (RTGS) systems have long been the standard for such payments, but they come with limitations. For African businesses, particularly those engaged in regional trade, RTGS offers critical infrastructure to reduce delays and manage liquidity across multiple currencies. Yet, its reliance on traditional banking networks can still pose challenges, especially in regions where financial connectivity is fragmented.

Cryptocurrencies and blockchain technology present an alternative. While the volatility of cryptocurrencies poses significant risks, stablecoins – digital currencies tied to stable assets – offer a safer alternative for African businesses looking to reduce reliance on unpredictable local currencies and help facilitate trade with partners across borders. High mobile penetration, coupled with substantial remittance flows, is also key in driving cryptocurrency adoption, enabling greater financial inclusion and streamlining cross-border transactions. Blockchain, meanwhile, is being used to simplify settlement processes by providing an immutable record of transactions, reducing fraud, and speeding up settlements. However, regulatory clarity is still needed in many African countries before these technologies can fully integrate into the formal economy. Together, these payment innovations form a network of solutions that, if scaled effectively, could reduce the barriers to cross-border trade across Africa and beyond.

The adoption of regional payment systems like the Pan-African Payment and Settlement System (PAPSS) demonstrates what can be achieved when payment innovations are scaled continent-wide, hinting at the vast potential for deeper financial integration. PAPSS promises to harmonise payments within the African Continental Free Trade Area (AfCFTA) by enabling transactions to be settled in local currencies – a crucial step toward reducing Africa’s dependency on global currencies and easing liquidity constraints.

And African banks are taking heed – spurring the wave of innovation. However, the pace of innovation and adoption must be accelerated to ensure that these mechanisms are not just implemented but scaled, with the right infrastructure to meet the rising demands of cross-border trade. The G20 has set ambitious targets to reduce the cost of cross-border payments by 75% by 2027. These goals are not out of reach, but only if Africa acts swiftly. Both the public and private sectors, spurred by governments and financial institutions must drive the shift, ensuring regulatory harmonisation, fostering interoperability between national payment systems, and encouraging private sector-led innovation to continuously address inefficiencies in cross border trade.

Africa’s future as a leader in global trade depends on the modernisation of its payment systems today. The opportunity is immense, but so is the cost of hesitation. And time is of the essence.