Cross-border payments are evolving in Africa. Every day, there is a different pitch from startups springing up, introducing one way or the other for people to send and receive money across borders. Stablecoins; virtual wallets; or using API integrations to make a difference.
Coupled with the growing digital commerce activity on the continent, simplifying cross-border payments is the next bit finance players must crack.
While we’ve come a long way since the days of Hawala and slow wires, high costs, limited coverage, and complexities with fiat currency conversions still exist.
Tighter regulatory oversight and enhanced due diligence have rightly been made part and parcel of moving high-value transactions in and out of borders for any reason.
During a Moonshot panel on Wednesday, experts in the payments ecosystem argued that it is not the regulatory hurdles in Africa, but limited technology to build solutions that allow faster data exchange during these payments, that will slow the development of better cross-border solutions.
“Fintech is what happens when financial systems fail. Cross-border payments, historically, have been plagued by inefficiencies, and that’s where technology companies see a chance to make a difference,” said Guy Stiebel, VP Product of B2B cross-border payments fintech Cedar Money.
On the other hand, “old school” traditional banking players seem slow to catch on to what is trending in cross-border payments, but they might hold the key for this development that we seek.
There is an opportunity in a hybrid approach that combines fintechs’ agility and tech solutions with traditional banks’ reliability and regulatory knowledge.
During the Builders Summit that happened in May, fintech operator and investor Iyin Aboyeji noted, “If the government’s business is your business, they’ll never shut you down. The government also has to make money from what you’re doing.”
Banks have better relationships with regulators because they make the government money. Fintechs arguably have better technology. When fintechs and cross-border payments players start building in ways to align government interests—and that will likely involve traditional finance players—it will reduce regulatory pushback.
Experts remain optimistic that more innovations will happen, despite regulatory dynamics on the continent.
