1. The invisible toll

A trader in Lagos sells building materials to a buyer in Accra. The deal is done. The goods are ready to ship. All that's left is payment.

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But the money doesn't go straight from Lagos to Accra. It can't. The naira is converted to US dollars at a bank in Nigeria. That dollar value travels to a correspondent bank, typically in New York or London. From there, it's routed to another correspondent bank, then converted again, this time into Ghanaian cedis, before it finally reaches the seller's account.

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Two conversions. Two spreads. Several intermediary banks, each taking a fee. A journey that can take anywhere from three to seven business days, for a payment between two neighboring African countries.

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For a trader operating on a 15% margin, a few percentage points lost to fees and a week lost to settlement delays isn't a rounding error. It's the difference between a profitable deal and a wasted one. Multiply that across the thousands of similar transactions happening every day across the continent, and what looks like a minor operational inconvenience becomes one of the biggest, least discussed constraints on African trade.

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This is the hidden cost. Not a tariff, not a border delay, not a regulation. A payments problem, baked so deeply into how money moves across Africa that most businesses have stopped questioning it. They've just learned to budget for it.

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2. Why this still happens

The reason is structural, not accidental.

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Africa is made up of 54 countries, each with its own currency, its own central bank, and its own banking regulations. There is no shared currency the way the Eurozone has the euro, and no single dominant regional currency that most cross-border trade naturally settles in. When a business in one African country needs to pay a business in another, there's usually no direct path between the two currencies. The transaction needs a bridge, and historically, that bridge has been the US dollar.

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This is where correspondent banking comes in. Correspondent banks, mostly headquartered in financial centers like New York and London, act as intermediaries that hold relationships and accounts on behalf of banks that don't have a direct relationship with each other. It's a system built for an era when no African bank had a direct banking relationship with another, so every cross-border payment had to be routed through a trusted third party outside the continent.

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It works, but it's slow and expensive by design. Every bank in the chain adds a fee. Every currency conversion adds a spread. And because the system depends on a sequence of intermediaries operating in different time zones and under different compliance checks, delays compound.

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It's worth noting that even Africa's largest pan-African banks, the ones with branches across 20 or more countries, aren't fully exempt from this. A bank's branch in Ghana and its branch in Nigeria are technically separate legal entities, each licensed locally, each holding its own local currency reserves. Moving value between them still typically requires a bridge currency, unless both branches are connected through a shared local-currency settlement system. Having branches everywhere helps, but it doesn't, on its own, solve the underlying currency-bridging problem.

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3. The size of the damage

The numbers make the scale of this clear.

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Sending money across African borders costs an average of 8 to 8.8%, compared to a global average of 6.49%. The G20's own target for cross-border payment costs is 3%. Africa isn't just missing that target, it's paying close to triple it, and has been for years.

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Some corridors are worse than others. Sending $200 from South Africa to Malawi has historically cost as much as 24% in fees. The Chartered Institute of Bankers of Nigeria estimates that reliance on external intermediaries for intra-African settlement costs the continent roughly $5 billion a year in fees and delays alone.

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This cost doesn't fall evenly. It hits small and mid-sized businesses hardest, the traders, exporters, and manufacturers operating on thin margins who don't have the scale to absorb a few lost percentage points on every transaction. For a business running on a 15% margin, payment friction alone can be the difference between staying in business and not.

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Zoom out, and the consequence becomes visible at the continental level. Intra-African trade currently sits at around 16% of the continent's total trade. Compare that to Europe, where roughly 60% of trade happens within the region, or parts of Asia, where it's closer to 50%. Africa trades far more with the rest of the world than it does with itself, and the cost and friction of moving money across its own borders is a significant reason why.

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Poor payment infrastructure doesn't just slow individual transactions. According to the African Development Bank, poor infrastructure, payments included, can increase the overall cost of intra-African trade by 30 to 40%. That's not a minor tax on doing business across the continent. It's a structural ceiling on how much trade can realistically happen at all.

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4. What's actually changing

The good news is that the infrastructure underpinning African trade is starting to catch up to the ambition.

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On the institutional side, the Pan-African Payment and Settlement System (PAPSS) is changing how banks settle with each other. Instead of converting through US dollars, PAPSS allows direct settlement in local currencies, cutting out the correspondent banking detour entirely for participating institutions. It's been signed by 21 central banks and is already in use by more than 170 commercial banks, with countries like Ghana and Nigeria actively trading through it. Afreximbank estimates PAPSS could save the continent around $5 billion annually, and cut foreign exchange costs by 20 to 30%.

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On the merchant side, a different shift is underway, driven less by banks and more by how customers actually want to pay.

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Customer payment preferences are evolving. A growing number of customers, both within Africa and beyond, are choosing to pay with stablecoins, dollar-denominated digital currencies like USDT, used purely as a payment instrument rather than a speculative asset. For merchants, the ability to accept these payments directly means not leaving money on the table simply because a customer's preferred payment method isn't supported.

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This matters for two practical reasons.

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The first is cost. Traditional payment methods like card payments come with multiple layers of fees stacked between a customer's payment and a merchant's actual payout, acquiring fees, processing fees, interchange, sometimes currency conversion on top. Each layer chips away at the merchant's margin, and merchants often end up passing some of that cost back to the customer just to stay profitable. A stablecoin payment doesn't eliminate fees entirely, there's still typically a cost to convert from stablecoin to local currency at payout, but it removes several of those intermediary layers, shortening the fee chain and leaving more of the transaction value with the merchant.

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The second is reach. Expanding into a new African market traditionally means integrating that market's local payment methods one by one, different card schemes, different mobile money providers, different checkout flows, each with its own onboarding and compliance requirements. A merchant selling across borders has to either absorb that complexity themselves or wait for their payment provider to build it out market by market.

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A widely used stablecoin like USDT sidesteps that. Because it's accepted as a common payment rail across borders, a merchant can collect payment from a customer in another African country without needing country-specific checkout infrastructure built first. For a continent of 54 different regulatory and payment environments, that's a meaningful shortcut, not a replacement for local payment infrastructure, but a way to start selling across borders without waiting for it.

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Together, PAPSS and stablecoin-based payment acceptance represent two different fixes to the same underlying problem, one rebuilding how banks settle with each other, the other rebuilding how merchants get paid in the first place. Neither is a complete answer on its own, but both point in the same direction: away from a system built around routing everything through outside intermediaries, and toward one where money can move more directly between African businesses and their customers.

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5. What businesses can do now

None of this infrastructure helps if it isn't actually used. For businesses trading across African borders today, the shift isn't something to wait for, it's something to act on.

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Start by looking honestly at where payment friction is actually costing you. Most businesses absorb fees and delays as a fixed cost of doing cross-border trade without ever quantifying it. Pull the numbers. How much is lost to conversion spreads on a typical transaction. How many days does settlement actually take, and what does that delay cost in working capital tied up waiting. Once the cost is visible, it stops being background noise and becomes something worth solving for.

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Ask your payment provider direct questions about how money actually moves. Does a payment between two African markets route through a correspondent bank, or does it settle locally. Is your provider connected to PAPSS, or to a stablecoin-based rail, or neither. These aren't technical details to leave to a back-office team, they directly determine how much of your margin survives a cross-border transaction.

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If you're a merchant selling across borders, look at whether your customers already prefer alternative payment methods you're not currently able to accept. Every unsupported payment method is a transaction that doesn't happen, or happens with a friction-filled workaround that frustrates the customer. Expanding what you can accept, including stablecoin payments where it makes sense for your customer base, can mean capturing demand that's already there rather than building it from scratch.

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Finally, choose infrastructure built for where trade is actually moving. As local-currency settlement and stablecoin rails mature, the businesses that benefit first will be the ones already plugged into them, not the ones still routing every cross-border payment through a system designed for a different era.

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6. The stakes

Intra-African trade grew to about $213.8 billion last year, and is on track to reach around $230 billion this year, a 10% increase driven largely by AfCFTA implementation and regional trade reforms. The longer-term ambition is far bigger still, a continental market where African businesses trade as easily with each other as European businesses do within the EU. That ambition depends on infrastructure most people never think about until it fails them.

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Payments are not a footnote to that story. They are one of its central bottlenecks, and increasingly, one of its clearest opportunities. A trader who can settle a payment in seconds instead of a week, at a fraction of the current cost, isn't just saving money. They're able to take on more orders, work with more partners, and trade across more borders than the old system ever allowed.

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The infrastructure to do this already exists, and it's improving quickly. At Kora, this is the problem we're building for.  Payment infrastructure that lets African businesses move money across the continent as directly as the trade itself should move. The businesses that learn to use it now won't just save on fees. They'll be trading at a different speed than everyone still waiting for their payment to clear.

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