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Which technologies are underutilised by Africa’s cross border payment systems? Blockchain and multi-currency accounts APls are the two technologies that come to mind.
The slow adoption of blockchain is partly due to regulatory and legal challenges, and the volatility in cryptocurrencies. Governments and financial institutions have yet to develop frameworks for regulating and monitoring blockchain payments. Stablecoins are a major solution to the volatility problem.
Blockchain allows cross-border payments to be cheaper, faster and more secure. Blockchain payments are not like traditional payment methods. They do not need intermediaries and no one “organisation” is responsible. Each transaction is encrypted and a public record is kept.
Multi currency account APls allows fintechs to create accounts for their merchants and end-users by partnering with other financial institutions. These accounts will make borderless payments easier by increasing liquidity access. Unfortunately, this infrastructure only exists or is mature in a few African countries – Nigeria, Ghana and Kenya.
If companies had access to multicurrency account across Africa, currency conversion would be cheaper. Settlements would also be faster and reconciliation easier. The FX operations and, by extension, borderless trading will be improved.
Leveraging AI in the fight against fraud
A common use of Al is for transaction monitoring. Machine Learning (ML), algorithms can monitor spending patterns to flag suspicious behaviours. These algorithms can prevent identity theft, card fraud, and phishing. Al can be used to create risk profiles, verify the authenticity of documents and improve due diligence.
APls and integrating cross border payment solutions
APls can help to singularise operation. If a company offers settlements in 100 different countries, it will need liquidity partners, brokers and some kind of operation in each country. APls makes this easy. With APls a business is able to offer multiple payment options in different currencies and geographies. It can also balance and reconcile the treasury. APls means you don’t have to start from the beginning. APls can be used to access real-time rates of exchange. This access protects against the risk of fluctuation. APls help with interoperability, as most multi-currency tables have to connect to multiple brokers under the hood.
Cross-border payments and stablecoins in Africa
The use of stablecoins to make remittances cheaper and faster. Stablecoins provide a seamless currency transfer experience.
Imagine that you are traveling to the Maldives. With one simple exchange, you could convert your naira into USDC, and then into Rufiyaa(Rf) in order to pay for transportation, food, or hotel without having to access bureau de changes locally. It’s fast and efficient. Stablecoins are a way to get real value in emerging countries.
Interoperability of payment systems
Interoperability is a mirage in Africa. You must build your product according to your audience and your resources. Imagine building solutions for WhatsApp (OTC transactions). There is no standard global.
You must develop interoperable solutions that are based on market needs, particularly emerging markets.
Traditional banks are the only organisations that can hack into interoperability. They have the data, assets, and resources necessary to provide a borderless payment service. It will be interesting to watch how some banks perform in the future. You can read the entire report here
________________ (19659037)Paschal OKekeHead of Operations at CrissCross – a cross border payments company that leverages modern blockchain and fiat technology. He has nine years’ experience in leading global operations for companies such as Binance and Bolt.
Drawera– Expansion & Partnerships, Avian Labs. Gwera is an expert in fintech and web3 who focuses on the intersection of both. She has years of experience in building and scaling global Fintech companies. Now, she is driving global expansion and partnerships for Sling Money at Avian Labs.
