Chances are you’ve built a successful business in one country.

‍

You’ve also probably considered expanding to other countries. However, the big challenge is that you don’t know how to accept cross-border payments from prospective customers.

‍

In addition, you’re thinking of how to do this while giving them a smooth payment experience; paying with their local currency and favourite payment methods.

‍

Are these the thoughts on your mind?

‍

If so, a cross-border payment gateway is what you’ve been looking for.

‍

In this post, we’ll help you understand why they’re important, the opportunities you’ll gain using them, and how to use them to collect cross-border payments.

‍

What is a cross-border payment gateway?

A Cross-border payment gateway, also called an international payment gateway, is like a digital bridge or portal that financially connects people and businesses in different countries. 

‍

It allows customers to pay for a product or service in their local currency and favourite payment channel while the business receives the funds in their preferred currency. 

‍

This streamlined process removes the need for multiple currency conversions and complex banking procedures, making trade and doing business smoother and more efficient.

‍

For example, an e-commerce store in Nigeria can use Kora to accept payments from its Ghanaian customers. Their customers pay them in Ghanian Cedis using mobile money, and this e-commerce business receives this payment in their preferred currency.

‍

How can cross-border payment gateways help SMEs in Africa?

Business growth and expansion

Cross-border payment gateways allow businesses to expand across Africa,  increase their customer base, boost trade, and generate more revenue.

‍

They are perfect for two segments of businesses: African businesses that want to expand to other African countries and global companies outside Africa that wish to explore the African market. 

‍

Secure payment methods and fraud prevention

Good cross-border payment gateways follow global standardised security and fraud prevention practices.

‍

Protocols such as encryption and tokenisation make it safe for customers to transact with businesses without worrying about data breaches. Also, some payment gateways have a good chargeback management process for merchants to avoid fraud and manage their chargebacks. 

‍

Lower transaction costs

This happens in two ways– lower transaction fees and margins on currency conversion rate. 

‍

Payment gateways can charge as low as 0.3% of the entire transaction, while wire transfers, depending on the bank, can cost as high as $50 per transaction. 

‍

Currency conversions can also be expensive and difficult to manage, especially in volatile markets. To help manage the risks, some international payment gateways provide real-time currency exchange rates, forward contracts, and upfront pricing. 

‍

Financial inclusion

International payment gateways in Africa often integrate the different local payment methods adopted by urban and rural communities. 

‍

For instance, Kora allows you to accept mobile money payments in countries like Kenya, where the penetration rate of mobile money is over 38.4%. In addition to business expansion, you help promote financial inclusion by providing service to and accepting payments from everyone in rural and urban areas.

‍

Benefits of using a cross-border payment gateway

Access to the entire African and global market

A cross-border payment gateway allows you to expand your market across African countries and the world. You can be in Kenya and sell to customers in Nigeria, Ghana, South Africa, and other countries. 

‍

This diversifies your revenue streams and increases your business's stability in case of economic downturns in a particular country. 

‍

For example, Detail Africa, a Nigerian leather goods company, sells to its customers in Ghana using Kora’s cross-border payment gateway. They can also expand to Kenya and South Africa if they wish to. 

‍

You can accept payments in different currencies

Customers often prefer to pay in their local currency and favourite payment method because it’s convenient. A cross-border payment gateway gives your customer that seamless payment experience.  

‍

An international payment gateway provides access to multiple currencies and preferred customer payment methods. Thus, you can accept bank transfers and card payments from your Nigerian and South African customers and mobile money from customers in Kenya and Ghana.

‍

Your transactions are safe and secure

Card companies like Mastercard, Visa, American Express, and other global organisations are usually involved in cross-border payments. Because of this, payment processors and gateways must follow international payment standards and processes to protect merchants and customers. 

‍

An example is complying with PCI DSS and ISO standards and integrating secure practices like card encryption and tokenisation, which protect customer data and prevent fraud.

‍

Increased customer satisfaction and experience

Using a cross-border payment gateway means offering your customers various payment options. Your customers can pay you using debit cards, mobile money, bank transfers, or pay with bank. 

‍

This gives them a smooth checkout experience when they purchase from you and can turn them into repeat customers.

‍

Cross-border payment gateways make the world go round.

If you’re considering expanding your business to other African countries, a cross-border payment gateway will help. However, are you confused about how to choose one that’s perfect for your business? 

‍

---

At Kora, our goal is to connect Africa to the world and connect the world to Africa via payments. For startups and businesses working in Africa, we provide All The Support You Need ™️ to start, scale and thrive on the continent.

‍

Sign up to see all the ways you can thrive with Kora.