Where next for cross-border payments? Open infrastructure.

Infrastructure gaps are an issue for emerging markets. As we discuss in our blog on emerging markets, it’s a false assumption to believe that new markets want to move to the same banking system as established markets, but they do want infrastructure. We expect to see a move towards using open infrastructure or payment networks because it provides a faster service. This in turn, makes it easier to tap into the mobile economy that is being built in sub-Saharan Africa.

The issue of cross-border payments is a development priority rather than a technical reform, said Nigeria’s central bank governor, Olayemi Cardoso. Speaking at the G-24 Technical Group Meetings, he said ‘cross-border payments remain too slow, too costly, and too fragmented’, as reported by Ayodeji Adegboyega in Business Insider Africa. At the same time, according to FXC Intelligence, B2B payments for small/medium enterprises have the highest share of total revenues of any segment. They ‘represent a 7% share of cross-border payments, but have a 31% share of total revenues’. Cross-border payments are integral to the growth of sub-Saharan Africa and they need to connect with an economy that is mobile-first.

We see cross-border payments moving to open infrastructure. The aim is to address the critical inefficiencies of traditional correspondent banking: slow speed, high costs, lack of transparency, and limited accessibility. It is likely to include banking APIs, distributed ledger technology (DLT), and interlinked domestic fast-payment systems. While progress is being made, the market is evolving through a mix of complementary solutions rather than a single dominant model, with traditional banking, interlinked systems, and crypto rails likely to coexist for some time. Alongside this, we expect continued focus on interoperability with areas such as stablecoin as demand and interest climbs.

This development reflects the need of mid-sized businesses in sub-Saharan Africa. They want to be able to control the speed, routing, timing, price and settlement of their payments. Growth businesses want to work with multiple fiat currencies, and in stablecoin too. They want agnostic rails; a choice between conventional banking rails or stablecoin, depending on how and when they want the transfer to arrive. This innovation market is growing rapidly and leading the way in payment methods.

To support growth, businesses in sub-Saharan Africa need a reliable, resilient infrastructure. This helps to drive value. It happens through improved connectivity with an ecosystem, control over routing options, and trust. Within the network, payments happen instantaneously. So a mid-market business spends less time managing banking or waiting for transfers. Speed gives them control because it reduces exposure windows and therefore operational risk: it helps businesses to use their cash more effectively. Additionally, a higher payment success rate improves revenue. Open infrastructure helps businesses to scale because it reduces payment failures and makes it easy to accept multiple payment types.

Ultimately, open infrastructure support payments networks that provide modern, fast businesses in a mobile market. It give businesses a choice of banking systems, control over their payments processes and confidence in the way they can grow the business. As the central bank governor says, this isn’t just a technical issue, it’s a development priority, for businesses, as well as the region. We see open infrastructure as the way forward for cross-border payments.

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