Growth and Emerging Trends with Cross-border Payments in Africa
In recent times, many businesses, whether wholesale or retail, have moved online. Both customers and businesses are no longer hindered by distance, to buy and sell, thanks to cross-border payments systems and growth in that sector
If you are wondering what cross-border payments are, and how they are changing in Africa, for customers wanting to make online payment for goods and services, or as a business owner using e-commerce, then, you should read to the end.
Cross-border payments are transactions between people, companies, banks or settlement institutions such as fintech companies, operating in at least two different countries. For example, Sandra can stay in Nigeria and order Brazilian hair from a hair vendor or manufacturer in China. All the hair vendor had to do was open an online shop, and fit it with an e-commerce plug-in such as woo commerce.
Before this time, the African e-commerce sector faced challenges with cross-border payments, such as;
- High settlement fees. People pay as high as 9% for a $200 payment.
- Inefficiency of banks to handle cross-border payments. A cross-border payment could take days to be completed as some African banks were not equipped with the required infrastructures to handle these payments.
- Government regulations in one country affect how payments are made from that country.
However, growth in e-commerce sector has brought about positive changes in how cross-border payments are done. Consequentially, three (3) emerging trends noticed with cross-border payments, especially in Africa are;
- Increasing number of new entrants in the sector.
New entrants such as fintech companies have come up with innovative online payment solutions, bringing up new ways to solve old pain points. Klasha being a new entrant in the sector has been working round the clock to solve some of the challenges faced by businesses and customers using e-commerce, especially as it concerns cross border payments.
- Increasing volume of online payments.
With more people having access to phones, there is an increasing volume of cross-border payments, as more people have access to online payment platforms. Before now, people need to walk into banks, to make such payments, but with e-payment platforms such as Klasha, available also as a mobile app, customers can make payments for goods and services, from the comfort of their homes, using their mobile phones. This is also good news for retail businesses. In fact, global mobile wallet usage at the point-of-sale (POS) is expected to shift from to 30% in 2023.
- Increasing trades in Africa and less reliance on the USD as a settlement currency.
One of the good things done by fintech companies such as Klasha, is utilizing cross currency pairs. One does not need to convert their money to USD before making cross-border payments, as was obtainable before. The good news is, with Klasha, a customer who wants to purchase goods or services abroad can do so in their local currency, such as NGN, KES, and GHC. Businesses can also accept international payments in NGN, KES, GHC, successfully, using the Klasha checkout on their e-commerce sites.
In conclusion, cross-border payments will continue to change and witness innovations geared at helping business attract and serve new markets. Klasha is poised to be at the fore-front of this innovation.