Briana Marbury, Interledger Foundation, President and CEO.

Africa has never been a laggard when it comes to finding solutions to its very unique challenges. As anyone living here will tell you, innovation blooms in the harshest environments. 

An enabling regulatory environment for open payments will afford thousands of Africa’s brightest minds the opportunity to collaborate and imagine new services that will not only benefit their communities, but could also significantly enhance the global payment ecosystem.

Ripple, a well known blockchain technology company, has been using open payments to facilitate cross-border remittances, often at a fraction of the cost of traditional remittance services. 

Savvy businesses have also been using open payments to settle payments and international trade transactions more efficiently with TigerBeetle. Another service, Fynbos, allows people to send and receive funds using social media handles.

Open payments have already been the catalyst for some exceptionally innovative new payment products.

Most recently, Chimoney enabled cross-border payments to over 130 countries. This allows money transfer via bankless digital wallets, as well as instantly converting it into a traditional or emerging payment method of one’s choosing. 

This will be a game changer, especially for those in the gig economy, to bypass the often hefty bank fees, exchange rates and other transaction charges that have traditionally sliced into their earnings.

It’s more than just a payment

Open payments enable faster, cheaper payments, but the technology also plays a part in how we will engage with the world around us in the future, with many exciting opportunities.

Privacy has become a huge challenge for web users. In response, Brave web3 browser has used open payments to facilitate payments to content creators through its Basic Attention Token system when people opt in to receive adverts.

Meanwhile, Snake Nation and its content platform are focused on helping African creatives monetise their work by leveraging microtransactions and web monetisation. 

By utilising open payments and open finance features, it is working to make it possible for creatives to receive direct payments for their content, enabling a more sustainable and inclusive model for digital monetisation in the creative economy.

South Africans love their loyalty programmes and have proven themselves expert at gamifying them to maximise their returns. Open payments can enable loyalty programmes to be interoperable across different businesses. 

This will allow a customer to earn points at one retailer and redeem them at another, regardless of the payment networks they use, taking loyalty to the next level.

Businesses can now also lean into the data economy using open payments to facilitate the exchange of data between IoT devices and data marketplaces, creating new revenue opportunities. 

For instance a company that owns a network of smart sensors, can sell data to other businesses like a weather forecasting service.

So how can we use this technology to amplify the amazing potential of African innovation?

How Africa can benefit

The best approach to realise the biggest benefits of open payments in Africa involves leveraging existing technologies, creating enabling regulatory frameworks, and encouraging great regional collaborations.

The first and most important requirement is to make sure as many individuals, businesses and organisations as possible can connect with one another. 

Creating a seamless payment ecosystem requires interoperability between our diverse payment systems. Initiatives like the Pan-African Payment and Settlement System (PAPSS) are working towards connecting banks and payment service providers across the continent. 

The aim is to enable instant and secure cross-border transactions in local currencies. If they can get this right it will immediately reduce both the complexities and costs associated with traditional foreign exchange processes.

Expanding the instant payment systems to all African nations by 2030 will also facilitate easier and faster payments across borders, and governments should focus on connecting these systems to enable continent-wide instant payments.

With the high penetration of mobile phones it also makes sense for money platforms to build open payment networks, connecting millions of mobile wallets and providing access to diverse payment options to suit the many needs of individuals and businesses.

So if we have a technology blueprint, what's holding us back?

Harmonising regulatory frameworks to benefit the consumer

Consumer safety and protection must remain the cornerstone of any robust financial system. As tech boundaries are pushed the risks of fraud inevitably increase.

New research shows that businesses in EMEA now bear a cost of fraud that is 3.9 times the face value lost in fraudulent transactions, with digital channels accounting for 52% of overall fraud losses.

A recent conversation with Dre Ngare, head of innovation at Snake Nation (who has written extensively on the topic), highlighted just how crucial it is that our infrastructure and tools are designed to work cohesively, guaranteeing the integrity of the greater ecosystem.

Fortunately, most regulators enforce various transaction monitoring protocols. However, the challenge comes in the lack of regulatory harmonisation, and international approaches to fighting financial crime vary significantly due to different implementation and enforcement of regulations across jurisdictions.

Any well-designed, collaborative network must include central banks, governments, regional economic communities, the private sector, and should not neglect other vital stakeholders such as NGOs and academia. 

When central banks and governments collaborate we see regulatory frameworks that ensure a healthy and secure financial environment. Regional economic communities, meanwhile, enable the harmonisation of efforts for a more effective multi-country collaboration. 

The private sector adds the vital dose of pragmatism and their voice should be heard by regulators so as not stifle innovation.

The use of sandboxes could provide a controlled space where fintechs can experiment with new tech and business models without the risks associated with live implementation. 

These test-and-learn opportunities also serve to enhance sectoral skills and knowledge and are also particularly valuable for regulators, allowing them to properly weigh up risk versus reward in a safe environment.

The advancement of open payments in Africa could hold the key to turbocharge innovation, benefitting economies and uplifting communities through cheap and access to financial services. 

South Africa has a flourishing fintech ecosystem with 140 fintech startups, representing about 20.6% of all fintech startups on the continent, and fintech accounting for more than 30% of equity funding in the region in 2023.

Creating a fertile ground for a successful open payment ecosystem in Africa relies on collaboration between all stakeholders. As the Ghanaian proverb states:, "If you want to go fast, go alone. If you want to go far, go together."

The Interledger Summit from 26-27 October in Cape Town will discuss how the public and private sectors can participate in responsibly building digital public infrastructure for a new era of low-cost, real-time payments - for all.