High Costs Stall Cross-Border Payments in Africa

Cross-border payments in Africa are still some of the most expensive in the world. This is surprising given the fast growth of instant payment systems across the continent.

Sending $200 to another African country can cost up to 7.9 percent. This is more than double the United Nations Sustainable Development Goal target of three percent. Despite this, Africa's cross-border payments market, valued at $329 billion in 2025, is expected to hit $1 trillion by 2035.

Experts point out that mixed regulations, different policies, and heavy reliance on the US dollar are major obstacles. These issues slow down the creation of cheaper, more efficient payment systems across Africa.

“Retail digital cross-border payments are essential for Africa’s economic future because they unlock opportunities for financial inclusion, economic integration and sustainable growth across the continent,” said Sabina Mensah, deputy CEO of the AfricaNenda Foundation. She spoke during a meeting with journalists in Abidjan in July.

“Yet today, the key barriers include a lack of regulatory certainty, fragmented digital financial services policies and regulations, and limited cross-border financial services provider licences,” she added.

Africa has made solid progress in developing instant payment systems. Currently, there are 36 domestic instant payment systems and three regional systems in operation. Many have the technical ability to support cross-border transactions.

The regional platforms include the Pan-African Payment and Settlement System (PAPSS), which works across West Africa and parts of East and Southern Africa. The Transactions Cleared on an Immediate Basis (TCIB) system serves the Southern African Development Community. GIMACPAY is for the Economic and Monetary Community of Central Africa.

Despite the growing payment infrastructure, big regulatory challenges remain. Central banks across Africa still have not aligned their policies on licensing, foreign exchange rules, know-your-customer requirements, and other issues impacting cross-border payments.

Recent efforts to tackle these challenges are led by the Association of African Central Banks (AACB). The members generally agree that central banks should lead the way because they manage monetary policy and banking regulations.

At its general assembly in Yaoundé, Cameroon, in November 2025, the AACB passed Resolution 21. This directs its Task Force on Payment System Integration to spearhead continent-wide harmonisation, with technical support from AfricaNenda.

The task force has a tough job ahead. Consumers want payment services that are affordable, easy to use, and reliable. Providers face issues like data localisation rules, cloud storage restrictions, strict exchange-rate laws, and limited cross-border licensing. All these challenges have slowed down the connection of Africa’s payment systems and made transactions costlier.

Even though instant payment systems have made sending money faster, experts argue that speed is not the main issue. The real problem is settlement and liquidity.

Many cross-border transactions still depend on the US dollar as a middle currency. At the same time, African currencies can be tough to exchange directly. Very few ways exist for countries to settle payments with one another using local currencies.

This means central banks, commercial banks, and payment providers need to work together to improve regional settlement systems. Expanding options for local-currency settlements would cut costs, boost efficiency, and make it easier for businesses to trade across borders.

Experts suggest a practical way forward is to allow domestic instant payment systems to accept cross-border payments. They can connect these systems gradually through existing regional networks. This would avoid the delays and costs of building a new continental payment system while using the infrastructure already available.

Payment scheme operators, regulators, and industry players should focus on pilot projects and live payment corridors. These can show how the model works from start to finish, including pricing, regulatory compliance, and customer experience. If done right, such projects could help create a more interconnected and inclusive African payments system.