Aidi — Cross-Border Payments, The Future of Nigerian Fintechs?

Over the past decade, Nigeria has emerged as one of Africa’s largest fintech hubs, with startups redefining how people interact with money. From mobile payments to lending platforms, Nigerian fintechs have revolutionised financial access for millions of people. We’ve seen startups like Flutterwave, Paystack, and Chipper Cash lead innovations that are making financial services accessible daily. 

In recent times, financial services, through fintechs, have become more revolutionalised with money being able to move across borders as the world becomes more connected. This development alone has made fintechs more valuable in the economy, allowing millions of people to do business and receive payments without geographical borders. Traditional banks now, are either upgrading their systems to perform cross-border payments or are partnering with existing fintechs to be able to render such services to their customers.

Though the fintech sector may look very saturated, there are still many endless opportunities and innovations that can be birthed by startups in that industry to stay relevant in the future– one of which is cross-border payment. In a country like Nigeria, with a huge population of people in the diaspora, a thriving e-commerce sector, and an increasing number of remote workers, cross-border fintech solutions are becoming more relevant than ever.

So, if you ask me “Is cross-border payment the future of Nigerian fintechs?” My short answer will be “Yes!”- and for good reason.

Let’s explore why cross-border payment is now relevant in the fintech industry and if it truly is the future of Nigerian fintechs:

Why Cross-Border Payment is Now Relevant in the Fintech Industry

1. Opportunities for Global Trading: Nigerian businesses, especially small and medium-sized enterprises (SMEs), are engaging more in global trade than in the past years. They are now importing goods from China, the U.S, Europe, etc, and would need reliable cost-effective payment solutions to receive goods from their suppliers abroad. With the development of cross-border payment solutions, these people can now trade internationally, eliminating excessive fees and making global trade seamless.
2. The Rise of Remote Work and Freelancing: After the COVID-19 lockdown worldwide, many companies started operating remotely. Employers also started considering hiring remote workers, which created opportunities for people to work from anywhere in the world. Some Nigerians were able to grab this opportunity, while some opted for freelancing on platforms like Upwork and Fiverr. Working for international companies means getting paid in foreign currencies like USD, GBP, or Euros. Traditional banks often fall short in offering competitive exchange rates and quick access to funds. Cross-border fintechs like Payoneer, Geegpay, and Grey are filling this gap today, enabling Nigerian freelancers and workers to receive payments in foreign currencies effortlessly and convert them at better rates.
3. Diaspora Remittances Keep Flowing In: Nigerians abroad who have families and friends back home often send money to their families and friends to show their unwavering support. In fact, World Bank recorded that in 2022 Nigerians abroad sent over $20 billion back home making Nigeria one of the top remittance-receiving countries in the world. Traditional remittance channels like banks and money transfer operators usually have high fees and slow processing times. However, cross-border fintech platforms like Chipper Cash and Sendwave, Grey, and Geegpay are already disrupting this space and creating cheaper and faster alternatives to sending money home.
4. Opportunities in the Cryptocurrency and Blockchain Markets: Despite regulatory concerns, crypto remains a popular way for Nigerians to move money across borders. Fintechs leveraging blockchain for cross-border payments can offer faster and more secure alternatives to traditional banking. Leveraging blockchain for transparency and efficiency can make cross-border payments even faster and more secure.

Is Cross-Border Payment Truly the Future of Nigerian Fintech?

The future of fintech in Nigeria will likely be shaped by the ability to solve real-world problems, and cross-border solutions address some of the most pressing financial challenges Nigerians face today.

However, it’s important to note that cross-border fintech is not the ONLY future for fintechs. Local financial inclusion, credit access, and payment digitization still present enormous opportunities. But what sets cross-border fintech apart is its potential to connect Nigerians to the global economy, enabling them to participate more actively in international markets.

Startups that position themselves as reliable partners in this space are likely to thrive, not just locally but on a global scale. The focus should be on building scalable solutions, navigating regulatory hurdles, and maintaining customer trust. The road won’t be easy, but the rewards will be worth it. 

The Future is Borderless

For fintechs looking to adopt cross-border payment solutions to stay relevant, here’s a list of what you can do:

1. Partner with global financial institutions and payment processors to expand your reach. For instance, Paystack’s acquisition by Stripe opened doors to new opportunities in global payments.
2. Focus on User Experience. Build simple and easy-to-use products even for those who aren’t tech-savvy.
3. Adopt Emerging Technology like Blockchain, Artificial intelligence, and Machine learning to enhance security and reduce costs.
4. While addressing the pain points of the local market, design your solution with global scalability in mind.
5. Keeping an open line of communication with regulators like the CBN to help you navigate policy hurdles and stay compliant.