Transfers and Cash Continue to Dominate Cross-Border Payments in Africa Despite Fintech Growth -Report
According to a new Duplo report, traditional banking channels such as bank transfers and cash payments, continue to dominate the African cross-border payment landscape, even with the increasing presence of fintech companies.
The report, titled “The State of Cross-Border B2B Payments in Africa and its Impact on Trade, highlights that cash payments remain a significant component of informal cross-border trade in parts of West and East Africa, accounting for 40% of payments.
While traditional channels still handle large-value business-to-business (B2B) transactions, they are often hindered by high fees and extended processing times. This, according to the report, presents an opportunity for fintech companies to offer alternative solutions, particularly for small and medium-sized enterprises (SMEs) engaged in cross-border trade.
The report also underscores the scale of the B2B retail payments market in Sub-Saharan Africa, which the World Bank estimates at $1.5 trillion. Duplo anticipates that the demand for efficient, low-cost cross-border B2B payment solutions will grow, presenting both a challenge and an opportunity for financial institutions and fintech companies.
The report suggests that this growing demand could lead to significant changes in the financial landscape, especially with fintech introducing innovative services tailored to the diverse needs of African businesses, ranging from small traders to large corporations.
Furthermore, the report emphasizes the critical role cross-border B2B payments play in driving intra-African and extra-African trade. As businesses increasingly seek efficient and cost-effective payment solutions, fintech companies may be well-positioned to capitalize on this evolving market, potentially reshaping the future of cross-border trade in Africa.
Source: BusinessDay
