Cross-border payment and interoperability issues are holding Africa’s Fintech back
While the growing maturity of Africa’s payment systems infrastructure space has improved financial access, interoperability and cross-border money exchange remain challenges.
Speaking to ITWeb Africa, Daniel Oparison, Head of Growth, Brand Strategy, and Marketing at mobile money company Paga, said: “Making a cross-border payment is still a hurdle in Africa; it remains difficult to carry out those transactions in a low-cost way, and such transactions tend to be peer-to-peer (P2P) transactions.”
“As technology advances, with more partnerships among companies and the use of central switches, such as Nigeria Inter-Bank Settlement System, interoperability and cross-border activity will be significantly improved,” said Oparison.
He is also hopeful that the implementation of the Pan-African Payment and Settlement System (PAPPS) will help alleviate pressure and address hurdles including currency exchange.
PAPPS, launched in January 2022, is designed to enable inter-Africa trade by the use of local currencies, reducing exchange rate costs for traders.
“Cross-border activity around foreign exchange is a major challenge, so whatever we can do to keep the transfers between Africa and in African currencies will help a lot. The regulators have a role to play to clear the hurdles and make it a viable business opportunity cost-wise and regulation-wise,”Oparison added.
More Fintech players
Africa’s Fintech industry remains on a growth trajectory and, according to Financial and economic online publisher PYMNTS, raised US$ 1.8-billion by half-year 2022, almost matching the funds raised in the whole of 2021.
But will the variety of standards and technologies fragment the industry further?
Oparison doesn’t believe so. “The variety of Fintech tools available means consumers have more choice, and different tools meet the needs of different consumer segments. Some apps focus on local payments, some on savings, some on cross-border payments, and some on investments. It also means customers use fewer clicks to make their preferred selections rather than a generalised app with many tabs.”
Paga has claimed it is on track to provide 40-50-million Nigerian adult users in the next five years with access to financial services through a hybrid approach (both online and offline channels).
“We processed a record 1 trillion Naira in transaction values in 2021 and surpassed this total in 2022 by the end of May - recording 1.2 trillion Naira (US$2.9+ million),” said Oparison.