Enhancing cross-border payments to support Small businesses and individuals

Several regulatory challenges are hindering FinTech’s from harnessing the full potential of their cross-border payment solutions, especially in emerging economies. Ifeoluwa 'IO' Orioke, Chief Revenue Officer at Flutterwave offers his opinion.

In 2020, we asked one of our small business merchants what they love about Flutterwave. “Being able to receive payments from people in Qatar, for our deliveries here in Lagos, Nigeria,” the merchant answered. This merchant sold delicious barbecue meals in a box and delivered them to all parts of Lagos. Friends and family abroad had found it a great way to send gifts by paying from anywhere and having the meals delivered to their loved ones.

Ifeoluwa 'IO' Orioke, Chief Revenue Officer, Flutterwave

This was made possible by a history of innovation in cross-border payment methods which support individuals and businesses to stimulate economies. Previous generations had to physically travel, often long distances, to exchange goods and conduct international trade. In the advent of the digital age of convenience, wire transfers were launched by Western Union in the late 19th century, giving rise to Electronic Funds Transfer (EFT). It also led to the launch of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which was popularised and founded in the 1970s.

These one-time pioneering solutions have been crucial for many decades in enabling organisations to meet global cross-border payment needs. In that same time, international payments have often been plagued with high transaction costs, inefficiencies, and excessively long processing periods. These challenges, alongside technological advancements, growing internet connectivity, and increased mobile penetration, have given room to new players like financial technology companies (Fintechs). Some of these Fintechs, like Flutterwave, also serve as Remittance Service Providers (RSPs) and offer convenience, cost-effectiveness, simplified processes, and efficiency for individuals and businesses.

Due to growing demand for seamless, fast, and secure cross-border payments and a deliberate customer-centric approach, Fintechs have become critical players in the industry despite being relatively new market entrants. A May 2023 report by Boston Consulting Group and QED Investors projected global annual fintech revenues to reach $1.5 trillion by 2030—an astounding sixfold growth within a decade. This exponential growth, however, is not expected to be evenly generated or distributed. Take Africa, for example. While the continent's fintech revenues are projected to have a cumulative annual growth rate (CAGR) of 32% until 2030, South Africa, Nigeria, Egypt, and Kenya, otherwise called the “big four” fintech markets, will maintain their almost unchallenged dominance. This is not surprising. As of 2022, the big four markets accounted for 75% of the continent’s total investment of $4.85 billion (see Africa: The Big Deal).

But our attention should not be on only the growth statistics for economies or the P&Ls of large enterprises. Cross-border payments have significant impacts on individuals and small businesses as well. For example, Fintechs empower diasporan communities to directly transfer money securely and affordably to Africa, Latin America, and other emerging markets. Small businesses are also able to rely on real-time payments (RTPs). RTPs involve crediting electronic money transfer to the recipient’s account within minutes or a maximum of 24 hours – enhancing the livelihoods of millions and supporting economic growth and development. This contrasts sharply with long processing periods, expensive transaction fees, and the cumbersome nature of pioneers like SWIFT l.

Despite this remarkable progress, several challenges still hinder Fintechs from harnessing the full potential of their cross-border payment solutions. These challenges largely stem from Fintechs being increasingly subjected to regulatory burdens similar to banks, especially in emerging economies. These regulations, for example, are mostly fragmented and often involve multiple regulatory agencies with similar responsibilities. The lack of interoperability among payment infrastructures across emerging economies of Africa, Latin America, and Asia Pacific also poses significant challenges. This has made it difficult for successful payment systems like Mpesa to replicate their success in other countries across the continent.

However, it is worth noting that African governments, through initiatives like the Pan-African Payment and Settlement System (PAPSS), seem to recognise and work on these cross-border payment challenges. PAPSS is an initiative of the African Export-Import Bank (Afreximbank) to address regulatory challenges by harmonising regulations and enhancing interoperability. While such efforts are in the right direction, all stakeholders must take much more action to ensure regulations and initiatives like PAPSS strike a balance between consumer protection, technological innovation, and ecosystem stability.

At Flutterwave, we recognise these challenges and understand the importance of cross-border payments. That’s why we prioritise partnerships with banks and telecommunications companies, and work with other stakeholders like the regulators. The result? We’ve been making cross-border payments a reality for millions of Africans at home and abroad through our remittance solution – Send App by Flutterwave, an easy-to-use app.

Recently, we announced a collaboration with to provide Account-to-Account payments in Europe and the UK, making it easier to pay hundreds of thousands of small businesses on Flutterwave. A meteoric growth is feasible for Fintech. But, it will depend on strategic collaborations, continued expansion of existing offerings, and adoption of emerging technologies like Artificial Intelligence (AI) and cloud computing. On cloud computing, our collaboration with Microsoft Azure to continue building scalable and flexible cross-border apps and infrastructure on the cloud, speaks for itself.

Ifeoluwa 'IO' Orioke is Chief Revenue Officer at Flutterwave and an Endeavuor Entrepreneur with over 15 years of experience in finance. IO leads Flutterwave’s commercial strategy globally and guides the company's business growth and revenue efforts.