AFRICA STANDS OUT AS A FOCAL POINT FOR CROSS-BORDER PAYMENTS ANTICIPATING A GROWTH RATE OF 10 % ALONGSIDE ASIA .
INDUSTRY WATCH
AFRICA STANDS OUT AS A FOCAL POINT FOR CROSS-BORDER PAYMENTS ANTICIPATING A GROWTH RATE OF 10 % ALONGSIDE ASIA .
The pivotal role of digital accessibility for goods and services has become abundantly clear over the past few years . The global economy , now more than ever , relies on the seamless flow of transactions across borders .
In essence , the movement of money translates to economic activity . African nations witnessing payments in their local currency experience a direct impact on both the digital economy and the broader economic landscape .
Whether it involves individuals , businesses , or financial institutions spanning different countries , the realm of cross-border payments has taken centre stage in our interconnected world . The surge in e-commerce businesses and marketplaces has resulted in an increased volume of cross-border payments .
Consumer preference is quite straightforward . Individuals and businesses would like to be enabled with cost-effective options and the ability to send money near real-time . The existing platforms do not necessarily address these challenges resulting in high costs , delays , and limited accessibility .
As the demand for efficient , secure , and inclusive cross-border financial transactions grows , exploring the advancements and challenges in this dynamic landscape becomes increasingly essential .
Africa stands out as a focal point for cross-border payments anticipating a growth rate of 10 % alongside Asia . This is supported by the growing Internet penetration that is expected to reach an average of 70 %. Currently , around 90 % of the population is covered by mobile networks .
Remittance inflows into sub-Saharan Africa amount to $ 47 billion and Africa ’ s merchandise imports grew to US $ 706 billion in 2022 while exports grew to US $ 724.1 billion . Mobile money transaction volumes in Nigeria doubled to around 800 million in 2020 , according to the Central Bank of Nigeria , while data from South Africa shows that online commerce grew by around 40 % during lockdowns in 2020 and 2021 .
Payments play a crucial role in unlocking the potential of this continental market , linking digital entities to a market comprising 1 billion people . Digital payments in Africa have achieved a notable level of adoption , justifying , and necessitating the integration of merchants into the system .
Correspondent banking continues to be the primary approach for large-value B2B payments , intercompany transfers , and global settlement flows . Nevertheless , both banks and technology firms are actively innovating to offer faster and more cost-effective alternatives to the conventional correspondent banking model .
The development of new technologies is key to enabling individuals and businesses to participate in cross-border consumerism . The establishment of open banking standards and APIs is fostering interoperability among banks and technology providers . Open banking , designed to encourage competition and innovation in the banking sector , leverages technology and new business models .
The integration of cross-border payments as a product offering could be the next frontier for embedded finance solutions . For example , while shopping for international products or services , a payee could have the option to choose the best foreign exchange rate embedded in their shopping experience resulting in efficient payment .
The creation of Central Bank Digital Currencies has been described as a valuable tool for promoting financial inclusion and tackling remittance challenges
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