MOVING MONEY: Africa’s cross-border payments are hitting a local currency bottleneck

Moving Money: Africa's Cross-Border Payments Struggle with Local Currency Bottleneck

Cross-border payouts can face obstacles when substantial amounts of local currency are not readily available in real-time. Africa is actively developing faster methods for cross-border money transfers, yet these enhanced payment systems raise questions about whether banks and payment providers possess sufficient currencies, at appropriate prices, to settle these transactions.

In February, the Pan-African Payment and Settlement System (PAPSS) and Kenya's Pesalink revealed that over 80 Pesalink participants were linked to more than 160 banks on the PAPSS network, facilitating 24/7 cross-border payments in local currencies. Mobile money has already integrated digital payments into the daily lives of millions of Africans.

According to the Global System for Mobile Communications Association, mobile money processed more than $2.1 trillion globally in 2025, encompassing 2.3 billion registered accounts and 593 million active accounts on a 30-day basis. Africa (excluding North Africa) contributed more than two-thirds of the growth in registered accounts, positioning the region at the heart of the industry's expansion.

Despite these advancements, cross-border payments remain a more formidable challenge. The World Bank indicates that remittance costs have decreased to approximately 6% globally, but Africa continues to report the highest regional average. Meanwhile, stablecoins are emerging as a potential solution, with their global market capitalization reaching around $320 billion by the end of May.

However, the Bank for International Settlements suggests that their utilization in real-economy payments remains limited, and their performance across borders can be inconsistent once fees, foreign exchange (FX) spreads, and on- and off-ramp costs are taken into account.

Raj Kamal, the founder and CEO of TransFi, an infrastructure business providing payments services to over 70 countries, 250 payment methods, and 40 currencies, including stablecoins alongside local payment rails, projects about $5 billion in transaction volume for the fiscal year 2026. Kamal shares insights into Africa's strengths and weaknesses in payments, and the potential of stablecoins to alleviate liquidity pressures.

Bonface Orucho (BO): Could you elaborate on the process of building TransFi?

Raj Kamal (RK): I established TransFi in 2022, with the primary goal of enabling cross-border payments using stablecoins as the underlying infrastructure. Our primary objective is to render payments swifter, more reliable, straightforward, and economical for businesses and individuals in emerging markets across Asia, Africa, and Latin America.

Over the past four years, we have constructed a business that facilitates remittances, payroll processing, freelancer payments, and B2B transactions into and out of Asia, Africa, and Latin America.

BO: When comparing Africa with Asia and Latin America, where does the continent excel in payments, and what areas require improvement?

RK: In terms of transaction volumes and flows, particularly remittances coming into Africa from Europe or the Middle East, Africa exhibits substantial activity. Outbound flows from Africa to other regions, particularly China, are also substantial and growing rapidly. Significant initiatives include the mobile money revolution, spearheaded by M-Pesa, which spread throughout Africa, fostering financial inclusion and payments.

Additionally, airtime tokenization, turning airtime into a tangible asset for digital transactions, represents a precursor to contemporary stablecoin and real-world asset payments. Africa has consistently demonstrated innovation in payments, with the Pan-African Payment and Settlement System being a notable effort to enhance the speed and efficiency of cross-border transfers and settlements across the continent.

I would not consider Africa as lagging; rather, the primary challenge lies in deepening liquidity across currencies to facilitate faster and more affordable cross-border transfers. Increasing financial inclusion must also be prioritized.