Cross-border payments in Africa remain expensive, slow and fragmented. Despite mobile money adoption exceeding 50% in several markets, sending money from Lagos to Nairobi or from London to Accra often involves multiple intermediaries, opaque fees and settlement delays of two to five days. The FY Times spoke with the founder of a fintech company building a new payments corridor to address these frictions. The conversation covered infrastructure design, regulatory hurdles, revenue models and the outlook for pan-African payments.
The Problem: Fragmented Corridors and High Costs
The founder began by describing the current state of cross-border payments in Africa. "The average cost of sending remittances to sub-Saharan Africa remains above 8%," they said, citing World Bank data. "That is nearly double the global average and far above the UN Sustainable Development Goal of 3%." The high cost stems from correspondent banking relationships that require multiple banks to process a single transaction, each taking a fee and adding settlement time. For businesses, the problem is compounded by currency inconvertibility and limited access to foreign exchange. "A small business in Ghana trying to pay a supplier in Kenya might wait a week and lose 10% to fees and unfavourable exchange rates," the founder noted. "That is not just an inconvenience; it is a barrier to trade."
The Solution: A New Payments Infrastructure
The founder's company has built a platform that aggregates liquidity from multiple sources, including local banks, mobile money operators and international forex providers. The platform uses a combination of stablecoins and real-time gross settlement (RTGS) rails to settle transactions within minutes rather than days. "We are not trying to replace existing financial systems," the founder explained. "We are building a layer that connects them more efficiently." The platform charges a flat fee per transaction, typically 1% to 2%, and passes on the interbank exchange rate without markup. "Transparency is key," the founder said. "Our users see exactly what they will pay before they confirm a transaction."
Regulatory Navigation: Licensing and Compliance
Operating across multiple African jurisdictions requires navigating a patchwork of regulatory regimes. The founder described the approach as "licensing where necessary, partnering where possible." The company holds a payments service provider licence in its home market and has partnered with licensed entities in other countries to comply with local regulations. "Regulators are increasingly supportive of fintech innovation, but they are also cautious about money laundering and consumer protection," the founder said. "We invest heavily in compliance infrastructure, including transaction monitoring and know-your-customer (KYC) systems." The founder noted that the African Continental Free Trade Area (AfCFTA) has created political momentum for harmonised payments regulation, but implementation remains slow. "The vision of a single African payments market is compelling, but the reality is that each country has its own rules, and those rules change frequently."
Revenue Model and Unit Economics
The company generates revenue primarily from transaction fees. The founder emphasised that unit economics depend on volume. "Cross-border payments are a scale business," they said. "The fixed costs of compliance, technology and liquidity management are high, but the marginal cost of each additional transaction is low." The company has focused on acquiring high-value business-to-business (B2B) customers first, because they generate larger transaction volumes and lower churn. "Consumer remittances are a larger market by number of transactions, but the average ticket size is smaller and the cost of acquisition is higher," the founder explained. "We started with B2B and are now expanding into business-to-consumer (B2C) corridors."
Competitive Landscape
The founder acknowledged that the cross-border payments space in Africa is becoming more crowded. Competitors include established players such as Western Union and MoneyGram, mobile money operators such as M-Pesa, and newer fintechs such as Flutterwave, Chipper Cash and BitPesa. "Each competitor has a different approach," the founder said. "Some focus on mobile money interoperability, others on cryptocurrency settlement, others on traditional bank transfers. We believe our advantage is in the combination of speed, cost and transparency." The founder also noted that partnerships with local banks and mobile money operators are critical for distribution. "We cannot reach every customer directly. We need to embed our infrastructure into existing platforms."
Commercial Impact
The commercial implications of lower-cost, faster cross-border payments in Africa are significant. For businesses, reduced transaction costs and faster settlement times can improve cash flow and enable new trade relationships. For investors, the fintech companies building this infrastructure represent a high-growth opportunity, particularly as the AfCFTA increases intra-African trade. For mobile money operators and banks, partnering with or acquiring such platforms could be a defensive move to retain customers and transaction volumes. The founder estimated that the total addressable market for cross-border payments in Africa exceeds $100 billion annually, including both formal and informal flows. "Even capturing a small percentage of that market represents a substantial revenue opportunity," they said.
Risks and Unknowns
The founder identified several risks. Regulatory fragmentation remains the most significant. "A change in foreign exchange policy in one country can disrupt our entire network," they said. Currency volatility is another risk, particularly for platforms that settle in stablecoins or local currencies. "We hedge where we can, but hedging costs eat into margins." Technology risk includes reliance on internet connectivity and mobile network infrastructure, which remains unreliable in some regions. Finally, the founder noted that competition is intensifying, and that larger players may be able to offer lower fees due to economies of scale. "We need to move fast and build network effects before the window closes."
FY Outlook
The outlook for cross-border payments in Africa is positive but uneven. The founder expects continued growth in transaction volumes, driven by increasing intra-African trade, diaspora remittances and digital adoption. Regulatory harmonisation under AfCFTA could accelerate growth, but the timeline is uncertain. The founder predicted that the next two to three years will see consolidation in the sector, with larger fintechs acquiring smaller players to expand their geographic coverage and customer base. "The winners will be those that can achieve scale while maintaining compliance and trust," the founder said. "It is a marathon, not a sprint."
Conclusion
Cross-border payments in Africa are being disrupted by a new generation of fintech companies that combine technology, regulatory navigation and partnerships to lower costs and settlement times. The commercial opportunity is large, but the risks are significant. For operators, investors and regulators, the key is to understand the trade-offs between speed, cost, compliance and reliability. The founder's advice to other entrepreneurs: "Focus on solving a real problem for real customers. The technology is the enabler, not the solution."
Why It Matters
Cross-border payments in Africa cost more than double the global average, constraining trade and financial inclusion. New fintech infrastructure that lowers costs and settlement times could unlock billions in economic activity, reshape competitive dynamics among banks, mobile money operators and payment platforms, and create investment opportunities in a high-growth sector.
