Cross-border payments are becoming increasingly vital for SMEs as globalization accelerates. According to the 2023 Mastercard Borderless Payment Report, 60% of small businesses now source more suppliers internationally than they did a year ago. This trend is particularly evident in Africa, where SMEs are increasingly leveraging cross-border trade to drive growth and access new opportunities. It is also relevant for international SMEs seeking to access African markets or establish partnerships with African businesses.

In the latest article of the Bridging Borders with Africa series, we explore how SMEs currently navigate cross-border payments and the challenges they face. While previous articles addressed general challenges impacting both SMEs and individuals, this piece will focus specifically on the experiences of SMEs. This aligns directly to Pillar 1 of our Five-Pillar Framework: Market Fragmentation and Structural Inefficiencies.

We’ll also be featuring meCash, a company using blockchain technology to streamline cross-border payments for SMEs — and hearing from Modupe Diyaolu, CEO and Co-Founder of meCash.

 

The Significance of Cross-Border Payments for SMEs

SMEs are generally defined as registered businesses with fewer than 250 employees (IFC, 2009). According to the World Bank, “SMEs play a major role in most economies, particularly in developing countries.” In Africa, SMEs account for approximately 90% of all businesses and contribute nearly 80% of employment across the continent. In Nigeria, this concentration is even more pronounced, with SMEs making up 96% of all businesses, compared to 53% in the US and 65% in Europe (LSEG, 2018).

Given their economic significance, cross-border payments are critical for African SMEs, as they directly impact their ability to trade, grow, and remain competitive in an increasingly interconnected global market. Beyond Africa, international SMEs engaging with African markets also rely on cross-border payments to facilitate trade, access new customer bases, and secure partnerships.

 

How SMEs Currently Process Cross-Border Payments into and out of Africa

Today, SMEs conducting cross-border payments into and out of Africa rely on a combination of traditional, fintech, and informal channels. Each comes with distinct trade-offs in cost, speed, reliability, and compliance:

1. Traditional Banks & Correspondent Banking

Many SMEs still use traditional banks for international payments, particularly for large B2B transactions.

• Payments typically use the SWIFT network, with settlement times ranging from 3–7 business days.
• Fees can be significant, often ranging from 4–7% or more.
• Access to the global trading currency - USD can be a challenge, especially in markets with capital controls.
• Documentation and compliance requirements can add delays and costs.

2. Fintech Payment Platforms

Fintech platforms provide wallet-based or API-driven cross-border payments, often settling transactions locally through partnerships with banks or Money Transfer Operators (MTOs). Recently, some platforms have begun using stablecoins for instant settlement, converting them to local fiat currencies upon receipt.

• The rise of these digital payment channels has helped to reduce the complexity and cost of international transactions for African SMEs.
• However, regulatory frameworks are still evolving, impacting adoption and scalability.
• Additionally, the availability of these platforms can be limited in certain markets, particularly in underserved regions.

3. Mobile Money

SMEs often use mobile money services like M-Pesa and MTN MoMo, integrated with cross-border platforms. This approach is particularly prevalent in East Africa.

• Effective for small, frequent transactions, but less suitable for larger B2B payments.
• Can be corridor-dependent, limiting broader applicability across Africa and restricting access to wider regional or international markets.

4. Informal Brokers & Agents (e.g., Hawala-Like Networks)

SMEs use informal brokers or agents to send and receive money, often bypassing formal banking systems entirely and relying on trust and personal networks.

• Particularly relevant for underserved corridors, such as Kenya-Middle East and Kenya-Asia, where many financial institutions lack the infrastructure to facilitate international transfers (Citizen Digital, 2024).
• A significant portion of African SMEs operate informally e.g. in South Africa, 95% of SMEs are micro enterprises, with over 80% unregistered — a trend reflected across the continent (McKinsey, 2022).
• This method can be risky due to the lack of regulation, legal recourse, and transparency.

Interestingly, Andrew Torre, Regional President for Central and Eastern Europe, Middle East, and Africa (CEMEA), noted that informal B2B payments across Africa remain largely untapped, with the potential value estimated at $145 trillion (Visa Payment Forum, 2024).

5. Invoicing Workarounds & Offshore Accounts

Some SMEs establish offshore entities or partner with distributors abroad to access their trading currency USD.

• While effective for larger SMEs, this route is costly and complex, involving tax, legal, and compliance considerations.
• Consequently less accessible to smaller SMEs, particularly those in underserved regions.

 

Despite the range of available payment methods, many smaller SMEs in Africa remain excluded from formal cross-border payment systems, particularly those in rural or underserved areas. For instance, in sub-Saharan Africa, only 15% of SMEs are involved in international trade, compared to much higher rates globally (IFC, 2024).

To address these gaps, initiatives like the Pan-African Payment and Settlement System (PAPSS) are working to reduce costs and streamline transactions, enabling real-time payments in local currencies. Additionally, the efforts of African Continental Free Trade Area (AfCFTA) to harmonize trade regulations and lower transaction costs could further facilitate cross-border payments for African SMEs.

 

Key Challenges African SMEs Face in Cross-Border Payments

According to a 2024 survey by the African Export-Import Bank, 68% of SMEs identified payment-related issues as the primary obstacle to expanding their international trade activities. These challenges limit SMEs’ ability to access new markets, diversify revenue streams, and compete globally. Below, we outline some of the key challenges faced by SMEs in cross-border payments:

1. Delayed Fund Transfers

• Delays in receiving funds from foreign customers or hurdles in paying suppliers can strain cash flow, disrupt operations, and damage an SME’s credibility with international partners.

2. High Transaction Costs

• Unlike larger corporations, SMEs often lack bargaining power to negotiate favorable rates, resulting in higher costs per transaction.
• The cost of cross-border payments can be especially prohibitive for SMEs using informal brokers, with fees reaching up to 12% per transaction (Citizen Digital, 2024).
• Additionally, cross-border suppliers may demand advance payments due to perceived risk, further tying up working capital.

3. Limited Access to Tailored Banking Solutions

• Many SMEs do not qualify for corporate banking solutions and are forced to use retail platforms that aren’t optimized for business needs.
• These retail platforms often lack tools for FX risk hedging, cash flow forecasting, and bulk payment automation, putting SMEs at a disadvantage when managing international payments.

4. Informality

• In Africa, where a significant proportion of SMEs operate within the informal sector, challenges related to registration and regulatory compliance are prevalent.
• Key obstacles include:KYC verification processes that require documentation many informal SMEs cannot provide and access to credible financial information.

5. Manual Processes

• Many SMEs lack digital payment systems, forcing them to manually reconcile payments, match invoices, and handle FX conversions. This reliance on manual processes increases the administrative burden, especially for lean teams with limited resources.

6. Regulatory Compliance and Documentation Costs

• Businesses engaging in cross-border payments must navigate complex regulatory frameworks, especially when operating across multiple jurisdictions.
• Compliance can involve:
  ◦ Stringent documentation requirements, adding to processing time and costs.
  ◦ Evolving regulatory landscapes, where frequent changes can create uncertainty and increase compliance costs.

While these challenges can significantly hinder SMEs’ ability to expand internationally, innovative payment solutions are emerging to address these gaps. In the next section, we explore how one such solution is working to simplify cross-border payments for SMEs.

 

Introducing meCash: Simplifying Cross-Border Payments for SMEs

meCash is a platform focused on making international payments simpler, cheaper, and faster for SMEs through the use of blockchain technology. Unlike traditional payment systems, meCash leverages stablecoins to reduce transaction costs and expedite settlement times.

But it’s not just about faster payments — meCash ensures that SMEs can transact through a variety of channels, including bank accounts, mobile wallets, and web3 wallets, creating flexibility and choice for businesses operating in diverse markets.

And they’re serious about keeping costs low: meCash is committed to capping total transaction costs for customers at no more than 2%, a significant reduction compared to the industry average.

Key features of meCash include:

• Stablecoins for Real-Time Settlement: meCash enables SMEs to on-ramp and off-ramp fiat to crypto, facilitating real-time settlements while also offering a hedge against currency fluctuations.
• Multi-Currency Wallet: SMEs can store value in either fiat or stablecoin, allowing them to manage funds in multiple currencies.
• SME Support and Payment Collection: SMEs can request payments, generate invoices, and monitor transactions through an integrated dashboard, making it easier to track cash flow and manage receivables.
• Regulatory Compliance and Licensing: meCash is a licensed payment provider in the United States, Rwanda, and Nigeria, ensuring that transactions are conducted within a regulated framework, bolstering trust and security for SMEs.

 

Spotlight Interview: Modupe Diyaolu, CEO of meCash

What inspired you to start meCash?
I was directly impacted by the problem. I struggled to get money out of Nigeria, and on the other side, when my mum wanted to buy or sell items on eBay, she had to go through me — which I thought was insane.

Moreover, during my time at PayPal, I saw firsthand how challenging it was for global tech to address payment issues in Africa. Even though PayPal was facilitating peer-to-peer transactions in 150 countries, the complexity of African payments remained unsolved.

So I felt compelled to launch meCash with the goal of solving a fundamental problem: any business wanting to transact into and out of Africa can do so seamlessly through us.

 

How do you see meCash evolving in the coming years?
Our vision is to become the infrastructure layer for African payments, whether for international businesses or local SMEs. We want businesses transacting into and out of Africa to sit on top of our platform, essentially viewing meCash as essential infrastructure.

We’ve set a target to expand to 16 countries over the next three years, strengthening our position as a cross-border payment solution for the continent.

What’s the biggest misconception about the problem you’re solving?
The West often overlooks this problem entirely, assuming that banks can easily facilitate cross-border transactions. But they don’t fully grasp the complexity of African payment systems. That may be because it’s only in the past decade that the voices of African individuals and businesses have started to emerge in the global conversation. Before that, the narrative was largely shaped by charities, money remittance and foreign governments.

Another misconception is the belief that tech alone can solve all cross-border payment issues in Africa. That’s not realistic. I believe 60% of the problem can be addressed through tech, but the remaining 40% requires alternative approaches. Younger people, especially those under 30 who’ve only known digital banking, may assume tech is the entire solution — but they haven’t experienced the challenges of physical banking or seen the deeper structural issues.

What have you learned from building in this space that other fintech founders should know?
It is extremely difficult to build in this space. People see chaos, but it’s organized chaos. Therefore, founders shouldn’t underestimate the diversity of cultures and habits within Africa. Even if you build a great solution, it will go nowhere if you don’t respect the way of life across the continent. Understanding local habits, convenience factors, and trust dynamics is crucial to gaining traction.

Are there other regions or markets solving this problem in ways you admire?
LatAm is a region I look to as a comparable market. They’ve had significant innovation around remittances, and platforms like Mercado Pago have achieved what PayPal couldn’t in that region. Big techs in the US were focused on Europe while LatAm local players were building. When US firms eventually saw the opportunity, they failed to respect the culture and habits, and that’s why local platforms remained dominant.

For African innovators, there’s a huge lesson to learn from LatAm. Many of their companies started in payments and then expanded into e-commerce — and vice versa. Africa is still in a fragile state, so for local players, the best way to protect their market position is by deeply understanding local nuances and maintaining control — just as LatAm players did. This approach naturally creates barriers to entry for outside competitors.

What are your thoughts on incoming infrastructure like Pan-African Payment and Settlement System (PAPSS) and its role in enabling cross-border payments?
I’m excited about PAPSS. I recently spoke about it in an article (click here). PAPSS is a much-needed solution, but there are key considerations they still need to address.

• Will they hold USD reserves?
• Will they lower transaction fees?
• Are they focusing on instant settlement?

Currently, PAPSS is limited in distribution, and they don’t have direct integrations with fintechs, which is a missed opportunity. I believe PAPSS will be valuable for some corridors but less effective for others.

Ultimately, while PAPSS is needed, I don’t believe in a single solution, nor should the ecosystem work in silos. The key is to integrate multiple solutions effectively.

What ecosystem-wide changes would make it easier for startups like yours to succeed?
I’d love to see more women get funded and for funders to have operator experience. It’s not just about the money — VCs should also bring tangible support, like assistance with licensing and strategic partnerships.

Final Thoughts

Cross-border payments are more than just transactions — they are gateways to global growth, especially for African SMEs. Yet, as this article has demonstrated, the barriers to accessing international markets remain substantial.

According to the World Bank Enterprise Survey 2023, only 35% of payments received by SMEs in Sub-Saharan Africa were digital, underscoring the extent of financial exclusion in the region.

To truly unlock the potential of cross-border payments, there is a need for inclusive, accessible, and efficient payment systems that cater to the diverse needs of African SMEs — from informal micro-enterprises to larger, established firms.

Innovative solutions like meCash are rising to the challenge, leveraging technology to bridge these gaps and simplify cross-border transactions, creating more opportunities for African businesses to connect with the world — and vice versa.

Here’s how you can support their mission:

• Learn more and follow their journey at me-cash.com
• Download the app to see how meCash simplifies cross-border payments for SMEs
• Share this story with anyone exploring new ways to address the challenges of cross-border payments for SMEs in Africa

Know other startups tackling cross-border payment challenges for SMEs? I’d love to hear about them. What do you see as the biggest barriers — or opportunities — in this space? Feel free to drop a comment or reach out directly.