The globalization of the economy has led to an increase in the number of cross-border payments. A global payment is a payment that is made from one country to another. Global payments can be made for a variety of reasons, including trade, investment, tourism, and remittances. In order to make a global payment, businesses and individuals must have a bank account in the country that they are sending the money to. They must also have a way to send the money, which can be done through a wire transfer, credit card, or debit card.
This piece posted at Zawya is yet another on the topic of cross-border payments, with the geolocation in this case being Africa. We have commented on this subject and location recently but this piece discusses the remittance scenario, mostly for Africans who live outside the continent as it seems. There is a large annual remittance inflow and the costs remain some of the highest cross-border remittance payments charges in the world, if not the highest. So the author discusses this and how fintechs are expected to come to the rescue.
‘For centuries people have crossed borders to live, work, and trade. While cross-border payment systems are crucial for financial inclusion and growth in a globalised economy, cost and efficiency challenges remain, particularly in Africa. Mark Dankworth, president of business development Africa at Ukheshe Technologies – a pan- African fintech enablement partner – says fintechs are at the forefront of improving cross-border payments on the continent…“There has been a significant increase in the movement of funds through digital platforms over the last five years. As mobile penetration continues apace in Africa, the continent is ready to take the next steps toward cross-border solutions that are less expensive, faster and more secure than ever before….”As the next frontier for major expansion and innovation, new technologies are necessary in unlocking massive untapped potential,” says Dankworth.’
Although many readers will be familiar with the fact that mobile money transfers have become quite common in Africa during the past decade and more (e.g.; M-Pesa) apparently the cross borders transfers remain expensive. Other issues also interrupt easy funds movement, such as the myriad of regulations that exists in each country, access to local funds and so forth. The fintechs are apparently working with banks to overcome these hurdles, so we’ll see what happens with cross-border remittance payments over the next couple of years.
‘There has been a clear acceleration in the demand for online money transfers as African consumers become more comfortable with digital payment solutions. Dankworth says technologies such as digital wallets and payment gateways are some of the ways through which fintech is simplifying the complex cross-border payment process while also improving ease of use and convenience for end consumers….“Dropping the cost of remittances is where the biggest opportunities in the market now lie. In the African context, it will be vital for customers to feel in complete control of their money and for the solutions they use to be seamless, interoperable and easy to use, which is where fintech enablement partners like Ukheshe are making the biggest impact.”
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group