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Africa’s fintech ecosystem may be attracting global investment and driving rapid digital payment adoption, but the continent’s underlying payment infrastructure still suffers from a critical “participation problem” that limits seamless financial transactions and cross-border commerce, according to a new analysis by TechCabal.
The report argues that while fintech companies have made significant progress in developing consumer-facing applications, the payment networks powering those services remain fragmented. This lack of interoperability continues to create barriers for businesses, financial institutions and millions of consumers seeking faster and more affordable digital transactions across African markets.
At the heart of the challenge are the continent’s domestic payment systems, which largely operate in isolation. Platforms such as Nigeria’s Nigeria Inter-Bank Settlement System (NIBSS), Kenya’s PesaLink, and other national payment switches have strengthened local transactions but are yet to achieve the level of integration required for frictionless cross-border payments. As a result, businesses trading across African countries often face high costs, settlement delays and complex currency conversion processes.
The report notes that these inefficiencies are particularly burdensome for small and medium-sized enterprises (SMEs), many of which must maintain multiple accounts or rely on expensive intermediaries to receive payments from customers and suppliers in different countries. For informal businesses, the cost and complexity of joining digital payment networks continue to encourage dependence on cash transactions.
Despite the growing adoption of digital finance, experts believe the next phase of Africa’s fintech evolution will depend less on launching new applications and more on strengthening the infrastructure that allows payment systems to communicate with one another. Industry initiatives such as the Pan-African Payment and Settlement System (PAPSS) are expected to play a key role by enabling businesses to settle cross-border transactions in local currencies, reducing reliance on intermediary currencies and lowering transaction costs.
However, the report points out that technology alone will not solve the problem. Achieving continent-wide interoperability will require stronger collaboration among regulators, banks, mobile money operators and fintech companies. It also calls for harmonised regulatory frameworks and greater participation from dominant market players, some of whom have been reluctant to open their payment ecosystems due to commercial considerations.
According to the analysis, addressing these structural issues could unlock significant opportunities under the African Continental Free Trade Area (AfCFTA) by making it easier for businesses to send and receive payments across borders. Improved payment interoperability is also expected to accelerate financial inclusion, expand digital commerce and strengthen Africa’s digital economy.
While Africa has made remarkable progress in fintech innovation over the past decade, the report concludes that the continent’s next major breakthrough will depend on building payment infrastructure that is not only technologically advanced but also widely adopted and interconnected. Until broader participation is achieved, the full economic benefits of Africa’s digital payments revolution may remain out of reach.
