Cross-border payment solutions bridging the gap between African consumers and global markets

Africa’s digital economy is growing at an unprecedented pace, with cross-border e-commerce estimated to expand by over 17% annually and projected to reach $75 billion by 2025, according to a study by the International Trade Centre (ITC). The rise in internet penetration, now at 43% across the continent, coupled with a young, tech-savvy population, is driving African consumers to access and demand more international products and services.

Historically, African consumers have been underserved by the global financial system, with less than 20% of the continent’s population holding a bank account that can handle international transactions. High remittance fees, sometimes exceeding 10% per transaction, and inconsistent exchange rates have limited consumer purchasing power for foreign goods.

Cross-border payment solutions are the lifeline of Africa’s engagement with global commerce. These platforms provide a practical answer to traditional challenges African consumers have historically faced, including currency exchange barriers, lack of global banking access, and high transaction fees.

Cross-border payment solutions represent a new wave of financial inclusion, enabling millions across the continent access to global goods and services. Over 200 million Africans use digital services regularly, pushing demand for seamless cross-border payment solutions to bridge the gap between local buyers and the global market.

With tools like digital wallets, mobile money and blockchain-enabled transfers, cross-border payment solutions simplify global transactions, make them more affordable, and eliminate excessive intermediaries. Their importance cannot be overstated as they unlock Africa’s potential for economic integration and digital growth, making it easier for African consumers and businesses to participate in the global market.

The rising demand for global access among African consumers

The demand for global goods and services among African consumers has increased over the past decade, primarily driven by Africa’s youthful population, digital transformation, and the powerful influence of social media. With 60% of Africa’s population under 25 and a rapidly growing middle class, the continent’s appetite for international products is immense.

In particular, smartphone adoption and expanded internet access are reshaping consumption patterns, making global brands and services more accessible than ever. A report by GSMA shows that smartphone penetration in Sub-Saharan Africa reached 50% in 2023, with projections to exceed 65% by 2025. These devices are key enablers, connecting young Africans to e-commerce platforms and driving demand for international products.

Internet connectivity has also played a pivotal role. Statista reports that as of 2023, internet penetration across Africa has reached 43%, and with growing investment in digital infrastructure, this figure is expected to continue climbing. E-commerce platforms like Jumia and Konga have expanded, catering to this rising demand by offering products that span both local and international markets.

This transformation is not just about increased connectivity; it’s about what connectivity enables. Social media platforms such as Instagram and TikTok are introducing African consumers to global trends, particularly in sectors like fashion, tech, education, and travel, creating a new era of global aspirations.

Several sectors stand out in this trend. The fashion industry has seen enormous growth as African consumers become more exposed to international styles through social media, with platforms reporting a 25% YOY growth in online fashion purchases from Africa.

Technological innovations are also in high demand as young Africans seek the latest devices and software to stay connected and productive.

In short, combining a youthful demographic, increasing smartphone and internet penetration, and social media's influence has accelerated African consumers’ demand for international products and services, marking a significant shift toward global market integration.

Challenges faced in traditional payment systems

African consumers face significant hurdles in cross-border transactions due to the weakness of traditional payment systems.

Currency instability is one of the foremost issues across many African nations. With exchange rates fluctuating frequently and sometimes drastically, consumers often encounter inflated costs when buying international goods and services.

Limited access to global banking services is another obstacle. World Bank estimates that only about 20% of the population across Sub-Saharan Africa has access to a dollar card, which is a primary tool for international transactions in traditional banking systems.

Many African countries also lack the infrastructure to support global banking networks, and consumers without bank accounts that provide international transaction options find themselves excluded from the global economy.

As African banks are often not integrated into major international banking systems like SWIFT, consumers who do manage to access global products and services often face delays or complications in payment processing.

This lack of access restricts the ability of millions of Africans to participate fully in cross-border e-commerce.

High transaction costs add yet another barrier. According to the World Bank, Africa has some of the world's highest remittance fees, with transaction costs often exceeding 10% per transaction.

These fees stem from the involvement of multiple intermediaries, each charging a service fee that compounds to increase the final transaction cost. These added fees discourage African consumers from making cross-border transactions for smaller purchases.

Many African consumers can’t transact globally due to the cumulative effect of these fees, currency issues, and limited global banking access.

Cross-border payment solutions that are bridging the gap

Cross-border payment solutions are designed to facilitate seamless international transactions by allowing businesses and consumers to move funds across borders quickly and efficiently. These solutions have become essential for Africa, where traditional banking challenges limit access to global markets.

Klasha, a global cross-border payment provider, has built a platform and API to facilitate collections and payouts in both local African currencies and exotic hard currencies like USD, EUR and more for both global and local businesses. Some cross-border payment solutions developed by Klasha include:

Klasha Pay: Also known as Pay-ins, is a solution that enables global merchants to accept payments from customers in Africa in local African currencies and get payouts in their preferred currencies like USD, EUR, or GBP. It integrates smoothly with e-commerce platforms and removes the barriers for global businesses entering African markets by supporting local payment methods like bank transfers, mobile money, and card networks.
Klasha Payment Links: Businesses without a website use Klasha Payment Links to create unique, customised, shareable payment links for customers in Africa to make payments globally. Customers can pay directly via these links in local African currencies, while the merchants get the payout in hard currencies like USD, EUR, and more. This makes it easier for merchants on platforms like Instagram or WhatsApp to transact seamlessly across borders.

Multi-currency accounts: Klasha’s multi-currency accounts allow businesses to hold funds in various African and global currencies, facilitating currency management without frequent conversions. This feature supports 50+ currencies, streamlining transactions for businesses with broad international reach.
Klasha Payouts: Through its payout API, Klasha enables businesses to disburse funds to African partners in local currencies, reducing reliance on intermediaries, lowering costs, and ensuring swift transactions.

These solutions reduce intermediaries and transaction fees, speed up processing times, and provide a more cost-effective way to manage cross-border payments between Africa and the global economy. By leveraging Klasha, businesses can overcome the traditional banking and currency challenges that previously limited African participation in global commerce, driving increased access to international markets for millions across the continent.

To learn more about Klasha’s cross-border payment solution and how you can adopt any of the payment solutions to your specific use case, click here or speak to our sales team.