By: Ebenezer Ghanney, Co-founder and CEO of Wewire Africa.
Cross-border payments have long been a challenge for individuals and businesses in Africa seeking to engage with tier-one countries such as the United States, the United Kingdom, and Europe. The complex web of regulations, high costs, and limited access to traditional financial services have hindered economic growth and international trade. However, the fintech revolution is changing the game, as innovative startups such as Wewire Africa are emerging to solve these long-standing issues and facilitate seamless cross-border transactions. In this article, I will explore the challenges of cross-border payments out of Africa to tier-one countries and how Wewire Africa is stepping in to bridge this gap.
The Challenges of Cross-Border Payments from Africa
1. High Transaction Costs: Traditional banks and financial institutions have historically charged exorbitant fees for cross-border transactions. These costs can significantly eat into the funds being sent and received, making it less appealing for individuals and businesses to engage in international trade and financial activities.
2. Slow Transaction Speeds: Traditional cross-border payment methods can take several days or even weeks to complete. This lag in transaction times can be especially detrimental in business contexts where timely payments are critical for operations.
3. Limited Access to Banking Services: In many African countries, a substantial portion of the population remains unbanked or underbanked. This lack of access to formal financial services makes it difficult for individuals to send and receive international payments. Almost every transaction requires you to head to a physical banking hall and spend hours in queues.
4. Foreign Exchange Complexity: Currency exchange is a significant hurdle in cross-border transactions. Converting local currency to foreign currency, often at unfavourable exchange rates, can result in significant losses for individuals and businesses.
5. Regulatory Challenges: Stringent regulations and compliance requirements can vary widely from one African country to another, adding complexity to cross-border payments. Navigating these regulations is often a daunting task.
6. Lack of adequate Liquidity: Banks in Africa generally do have enough FX liquidity to supply the needs of import businesses, multi-national businesses and fund managers who regularly need to transfer out millions of dollars. This is a result of inadequate allocation of FX from central banks to the local banks.
Wewire Africa’s Solutions for Cross-Border Payments
Fintech companies are emerging as champions in addressing these challenges and revolutionizing cross-border payments in Africa. Here’s how we are making a difference:
1. Lower Transaction Costs: Wewire Africa offers competitive pricing compared to traditional banks, reducing the fees associated with cross-border payments. Transparent fee structures ensure that customers know exactly what they are paying for. We charge 0.5% for cross-border payments compared to the 1 to 5% charged by competitors and traditional banks
2. Faster Transaction Speeds: Wewire Africa leverages digital technologies and blockchain to expedite cross-border transactions. Some transfers now occur within hours, compared to the days or weeks it might take through traditional channels. Depending on the market you are transferring funds to it should hit the recipient within 24hrs
3. Wider Accessibility: Wewire Africa makes financial services more accessible to the unbanked and underbanked populations in Africa. Through web apps and digital wallets, individuals can initiate and receive cross-border payments with ease.
4. Efficient Currency Exchange: Wewire Africa offers competitive exchange rates and convenient currency conversion services. This reduces the costs associated with currency conversion and minimizes losses due to unfavourable rates. For comparison, I used my local bank card to buy something online which was a rate of 12.25 GHS to $1, same day I used my Wewire Africa virtual card to make a transaction and the exchange rate was 11.88 GHS to $1.
5. Compliance and Regulatory Support: Wewire Africa has dedicated teams to navigate the complex web of international regulations and compliance requirements. This ensures that cross-border transactions are conducted legally and transparently. We’ve invested heavily in compliance tools to track real-time transactions our customers are doing
Wewire Africa is a multi-currency payment platform designed to empower businesses engaged in international trade. It enables businesses to conduct transactions across Africa and beyond, unlocking the true potential of borderless banking. Wewire Africa offers faster cross-border transactions with virtual accounts that hold and payout money into multiple currencies with your WeWire account. It also offers virtual cards for businesses that empower them to manage expenses, streamline payments, and gain control over transactions. Wewire Africa is operating with an MSB license from Canada with a presence in Ghana, Nigeria, Kenya, Uganda, USA, UAE and the UK. The company has processed over $400m in transaction volume since inception.