Cross-border payments across Africa have remained firmly out of reach due to the lack of interoperability among payment systems.
A report by Kora and Finextra with the title ‘The Future of Fintech in Africa 2023’ disclosed this.
It stated that over 20 years after fintechs across the continent started gaining prominence, cross-border payments across Africa were still a challenge.
The report read, “Platforms like e-transact cannot interact with M-Pesa, M-Pesa cannot connect with Vodafone Cash in Ghana, and Vodafone Cash remains disconnected from Celltel in Francophone regions. The cost of fragmented payments in Africa have higher transaction costs, limited access and financial inclusion, slowed economic growth, and general inefficiencies, whose costs we have yet to be aware of.”
The value of an interconnected Africa from a payment perspective is immeasurable and could herald frictionless transactions across the continent, the firms stated.
They noted that the launch of the Pan-African Payment and Settlement System was bringing the continent closer to seamless cross-border payments.
They explained, “PAPSS aims to rival traditional swift networks, functioning as an automated clearing house for pan-African payments and as a crucial cross-border payment switch, facilitating transactions across the continent. The rise of fintech companies across the continent presents an immense opportunity to transform cross-border payments and foster healthy competition to connect Africa under one unified API.”
Regulators, innovators, and financial institutions still appear to work with different playbooks, the firms stated.
They argued that there must be collaboration among various stakeholders along the value chain, to reduce the red tape and bring down unfriendly payment borders.
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