Author: Mladen Čolić, Sales Vice President: Fintech Africa at TransUnion
Africa is fast emerging as the world’s next frontier for growth. By 2050, more than one in four people on the planet will be African, according to the United Nations Economic Commission for Africa. With the youngest population globally, the continent is increasingly recognised as a centre of innovation, especially in financial services.
Behind Africa’s financial transformation is a lifeline often taken for granted: cross-border payments. Whether it is money sent home by migrants, capital to start small businesses, or funds for education and healthcare, these payments form the backbone of many African economies. In 2024, remittances to sub-Saharan Africa reached $92 billion, according to the World Bank. For 19 African countries, remittances make up more than 4% of GDP.
Yet despite this importance, Africa remains the most expensive place in the world to send money. The World Bank’s Remittance Prices Worldwide Quarterly shows that, on average, sending $200 to the region costs 8.4% in fees, well above the global average of 6.4%. Meeting the UN Sustainable Development Goal of reducing this to 3% would free up billions for households and communities across the continent.
Why cross-border payments matter
Cross-border payments are more than financial transactions; they are lifelines. In rural villages and urban centres alike, they fund education, pay for medical treatment, and serve as seed capital for small enterprises.
In South Africa, one of the continent’s largest remittance-sending markets, cross-border transfers are vital for supporting families in neighbouring countries such as Zimbabwe, Mozambique and Lesotho. These payments directly improve household welfare, but they also grow the local economies. When fees are too high, however, families lose out and money often flows through informal channels that can be opaque and risky.
Lowering costs and expanding access to secure digital payment solutions is therefore essential not just for individuals but for financial inclusion and economic development across Africa.
Several hurdles stand in the way of efficient cross-border payments:
- Unlike countries with unified systems, Africa’s 54 nations each have their own currency, central bank and rules. This patchwork makes transactions complex and expensive.
- Traditional banking relies on multiple intermediaries, each adding fees and delays.
- Transfers can take days to clear, and fees remain stubbornly high.
These challenges are not unique to Africa, but their impact is sharper here, where so many depend on small transfers to meet daily needs.
Despite these barriers, Africa is also home to some of the world’s most innovative financial solutions. Mobile money platforms like M-Pesa in Kenya have shown how mobile phones can leapfrog traditional banking and bring millions into the financial system.
New initiatives are now building on this momentum. The Pan-African Payment and Settlement System (PAPSS), launched by the African Export-Import Bank, aims to simplify and reduce the cost of cross-border transactions across the continent.
In South Africa, PayInc (previously known as BankservAfrica), Africa’s largest automated payments clearing house launched Rapid Payments Programme (PayShap) in partnership with the South African Reserve Bank and the Payments Association of South Africa. This system allows instant, low-cost digital transfers using just a cell phone number, laying the foundation for a more integrated payments ecosystem. BankservAfrica has also noted that interoperable payment infrastructure will be key to scaling cross-border solutions that are both safe and affordable.
Regulation catching up
For innovation to succeed, regulation must keep pace. Regional integration efforts like the African Continental Free Trade Area (AfCFTA) will only reach their full potential if supported by modern, interoperable payment systems.
Encouragingly, many regulators are moving in this direction. Central banks in Nigeria, Ghana and South Africa are piloting digital currencies, while regulatory sandboxes in Kenya and South Africa allow FinTechs to test new ideas under supervision.
At the same time, modernised approaches to know your customer (KYC) and anti-money laundering rules are enabling digital onboarding while maintaining compliance essential for building trust in new systems.
At its core, the drive to improve cross-border payments is about more than technology; it is about people. Today, nearly 500 million Africans remain unbanked, including around 16 million adults in South Africa. Without access to affordable financial services, many are locked out of opportunities to build credit, grow businesses or save for the future.
By lowering remittance costs, expanding mobile money networks, and introducing secure digital payment options, Africa has the opportunity to bring millions more people into the formal financial system. This creates a powerful financial inclusion flywheel: as more people gain access affordable services, they strengthen household resilience, fuel economic growth, and drive even greater inclusion.
At TransUnion, we’re committed to helping our partners unlock this potential. We continue to explore innovative ways to turn alternative data into actionable insights, looking ahead to how cross-border FinTechs and digital platforms can enable more inclusive, informed, trusted and secure decisions in the future.
