Expanding your business to other countries doesn’t have to be a big risk if you understand how cross-border payments work and how to accept them. 

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When you figure it out, you build multiple revenue streams and have a competitive advantage. While cross-border payments can be tricky due to currency conversions, regulations, compliance, and fraud, this guide will help you understand them.

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We’ll cover the different methods for accepting cross-border payments, the benefits, and how to start.

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What are cross-border payments?

Cross-border or international payments are digital payments between businesses or people in different countries. 

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While payments between people are more popular, B2B cross-border payments are bigger and more complex.

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That’s because of the number of parties involved, more difficult compliance checks, currency conversion, settlement processes and other factors.

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Methods you can use to accept cross-border payments

Wire transfers

WIre transfers are one of the most common methods to send money across countries for individuals and businesses. While they’re great for personal transfers and large sums of money, they are not ideal for business payments. 

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Wire transfers are generally expensive and take longer to process, depending on the country and currency. Transaction fees can be as high as $50 per transaction, and it can take up to three days for the receiver to receive the value. 

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This can cause reconciliation issues and cash flow problems for a business owner. 

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Debit and credit cards

Card payments are very common in Africa, and businesses that want to accept digital payments in Africa should have this option. It’s a dominant online payment option in Nigeria, as 37% of online payments in 2023 were card payments. In 2024, 43% of e-commerce transactions in South Africa were completed using a credit card.

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Mobile money

This method is common in certain African countries, such as Kenya and Ghana. In Kenya, there are over 77 million momo accounts and a population of 56 million.

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Also, 59.7 per cent of the Ghanaian population has a mobile money account. 

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If you want to accept customer or business payments in these countries, implement this method. 

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Pay with Bank

This is one of the fastest methods to accept cross-border payments.

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This method enables users authorize a payment using their banking credentials. In most cases, this method is instant. Your customers are able to pay you from their bank accounts without debit or credit cards or manually transferring money on their mobile banking app. It 

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Bank Transfers

Bank transfers are a common method of payment in countries like Nigeria. Processing times for bank transfers differ per country, but in Nigeria, they’re instant. 

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The parties in a cross-border transaction

Multiple entities need to work together to complete a cross-border payment. 

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1. Issuing/sender’s bank

This is the customer’s bank or financial institution in a transaction. They provide payment methods like debit cards or bank transfers. Most call them issuing banks for card transactions, but they’re sometimes referred to as the sender’s bank for bank transfers.

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2. Payment processors

Payment gateways act as the communication bridge between the business and the customer. Payment processors authorise the movement of funds during the process. Kora, Paypal and Stripe are payment processors.

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3. Acquiring/receivers bank

This is the merchant’s bank. Like the issuing/sender’s bank, it holds the merchant’s account and receives the payment during a cross-border transaction.

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4. Mobile money operator

In some African countries like Kenya and Ghana, customers sometimes pay through mobile money solutions like MPesa or MTN momo. 

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The mobile money operator is the customer’s operator. Examples are MPESA and MTN MoMo.

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5. Card network

The owner of the card brand the customer carries, such as Mastercard, Visa, Verve, American Express, and Afrigo. 

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How African businesses can start accepting cross-border payments

1. Research your target market; currency, tax and regulations

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The first step is to learn about the local currency, the preferred payment methods, regulatory landscape and tax requirements. For instance, mobile money is very common in Kenya and Ghana but not in Nigeria.

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Regulation and tax requirements can be complex if you want to accept business payments across African countries. 

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Figure out the requirements per country and follow them before you launch your business in those markets. 

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For example, Kenya and Cameroon offer tax breaks for companies that list on their stock exchange compared to Nigeria which relies on indirect domestic taxation, particularly excise duties, due to its economic structure. However, it is vital to note that most of these African countries have double taxation agreements with one another. For example, double taxation agreement exists between Nigeria, Ghana, Kenya and South Africa, amongst others.

‍John Olorunfemi - Senior Finance Associate, Kora.

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Also, ask questions about the regulations in each country, as regulatory requirements differ from country to country. If you need help with compliance in different countries, check out some partners and discounts in our Kora Startup Kit. 

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2. Select a payment solution

After research, choose a good provider that allows you to accept payments in those countries to give your customers a good payment experience. 

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Consider factors like multi-currency support, security, ease of integration, speed and regulatory compliance before choosing. 

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3. Setup security and fraud prevention processes

Businesses that use cross-border payments are susceptible to fraud, including chargeback fraud, identity theft, and other scams. 

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Implement security processes in addition to your payment partner’s security framework. Set up team permissions to manage account access. Use two-factor authentication. Respond to chargeback requests on time and flag suspicious transactions.

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Also, conduct regular security training for your team on phishing, vishing, social engineering, and other methods scammers use to attack businesses.

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4. Customise your customer experience to each country

Customer behaviour and preferences differ across countries in Africa. Tailor your payment experiences to cater to diversity. 

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For instance, if you’re selling to customers in Kenya, consider building your website to support Kiswahili or hiring account managers or customer support personnel who can speak the language. 

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If you own an e-commerce brand and your shipping, delivery, and return policy differs by country, communicate that to your customers.

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It’ll help boost customer satisfaction.

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What are the benefits of cross-border payments for your business? 

1. Sell to customers across Africa

By accepting cross-border payments, your businesses can reach larger African markets and grow your customer base across countries. 

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For instance, Venco, an estate management company, started in a small community in Port Harcourt, Nigeria. Now, it manages properties in 11 cities across Nigeria, Ghana, and Kenya. 

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2. Grow revenue with multiple income streams

Accepting cross-border payments expands your revenue sources because you have customers and generate revenue from multiple African countries. 

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In addition, when there’s market or currency instability in one of the countries, your revenue stream from stable markets can shield you from losses in unstable markets. 

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Because of this stability, you can also make long-term plans and projections for your business.

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3. Competitive advantage over other businesses

If you play in a highly competitive market, accepting cross-border payment can be a big differentiator. 

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Multiple revenue streams can signal to customers that your business is bigger and better than your competitors’ – inspiring confidence and more patronage. 

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4. Increased customer satisfaction

Customers want to pay in their local currency and use a convenient payment method. 

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If you accept cross-border payments, it’s easier for them to pay you instead of adopting another currency or payment channel they’re not used to. 

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5. International brand exposure and recognition

Would you rather be known only in Nigeria or be known only in Nigeria, Kenya, and Ghana? 

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If you chose the latter, accepting cross-border payments across multiple markets will help grow your brand reach and exposure. 

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This ultimately leads to more sales and revenue for your business.

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Types of businesses that can accept cross-border payments

E-commerce

If you sell products online, cross-border payments can help. You can easily embed a cross-border payment gateway on your website and accept payments from countries across Africa. An example is Detail Africa, an e-commerce company that sells fashion leather pieces to people in Nigeria and Ghana. 

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Travel and hospitality businesses

Airlines, hotels, tourist centres, and travel agencies serve customers worldwide who spend in different currencies. You should accept cross-border payments if you have any business or want to build in this industry. It’ll make it easy to do business with you.

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Exporters and importers

If you import and export products, you must constantly deal with businesses and people who use multiple currencies. Accepting cross-border payments will make your business easier to run.

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Remittance

This is one of the most common use cases of cross-border payments in Africa. Remittance to Sub-Saharan countries was valued at an estimated 53 billion U.S. dollars in 2022. In 2024, this value is predicted to increase to 56 billion U.S dollars. 

Forex and gaming companies

Forex and gaming companies always onboard customers from all over the world, so they need to accept payments from customers who use different currencies and payment channels. 

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If we didn’t mention your business in any of these categories, it doesn’t mean you can’t accept cross-border payments. 

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If you want to expand across African countries, cross-border payment is for you. 

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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.

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