Cross-border payments for businesses within Africa has remained difficult over the years, and while mobile payment adoption is increasing across the continent, there are still roadblocks. Fragmented banking systems that frequently differ from country to country, country-specific regulations, time constraints, and expensive transaction fees are all factors that make it difficult for business owners in Africa to envision a process where payments can be made seamlessly across borders, thereby impeding business expansion.
In the past few years, the increased international mobility of goods and services, capital and people (especially within Africa, and between Africa and the rest of the world) has allowed for the growing economic importance of cross-border payments. Factors that have led to this increased necessity for cross-border payments include manufacturers expanding their supply chains across borders, cross-border asset management and global investment flows, international trade and e-commerce; and migrants sending money via international remittances. According to World Bank estimates for 2020, total remittance flows totalled $714 billion, with low and middle-income countries accounting for $554 billion. African countries account for half of this figure.
We are able to highlight two key factors that hinder cross-border payments:
- Time: Cross-border payments are typically synonymous with long transaction settlement times especially when it involves two or more African currencies. It may take as much as 3 to 5 business days.
- Cost: The complexities of traditional banking systems, settling cross border payments are expensive, sometimes costing up to 10% of the transaction volume.
Fincra payments infrastructure for fintechs, and global businesses; solves this problem by creating a platform that gives merchants access to wallets in a variety of currencies to enable them make payouts and receive collections from anywhere in the world.
Traditional banking systems have limitations on cross-border transactions that Fincra eliminates; with the use of Fincra’s wallets, businesses in Africa can:
- Trade internationally without hassle.
- Have manufacturers and suppliers who reside abroad and pay them easily.
- Conveniently run an e-commerce store and sell goods and services and receive payments in multiple currencies.