Africa stands at a decisive moment in its digital finance evolution. Innovation is accelerating, mobile money is ubiquitous, and instant payment systems are fast growing across the continent. Yet one force continues to constrain seamless cross-border payments in Africa: regulatory fragmentation. Cross‑border payments involve moving money across country borders. Divergent rules, inconsistent licensing regimes, and limited cross‑border coordination are raising costs, slowing innovation, and preventing Africa from realizing the full promise of the African Continental Free Trade Area (AfCFTA). The conversation on regional harmonization of regulatory frameworks of payment services is timely and crucial. I recently moderated a discussion by key African finance experts who proposed a Payment Service Directive for Africa (PSDA) as a framework to regulate payment services in the continent. Some insights that emerged from the reflections:

Wholesale payments run on well-developed payment rails, including international wire transfers, but retail cross-border payments in most African corridors remain inaccessible to many users, expensive and largely informal. This means that millions of Micro Small and Medium Enterprises (MSME) are excluded from cross border trade opportunities and remittance flows are constrained, resulting in lost economic opportunities and slows implementation of the Africa Continental Free Trade Area (AfCFTA), a market of over 1.4 billion people. Instant payment systems have emerged in the past decade as critical infrastructure that facilitates payments digitally in near real-time and are always available. There are 36 instant payment systems (IPS) live in Africa, 33 country systems and 3 regional systems, already enabling some level of instant cross-border payments. Half of these systems are already enabling domestic interoperability. What will it take to leapfrog to continental interoperability and make any cross-border payment in Africa as instant, as fast and affordable as a domestic IPS transaction? We can achieve this by interlinking country and regional systems across Africa. The IPS ecosystem in Africa is very dynamic and is on the path of bringing the continent’s countries to access instant payment capabilities in the next five years. Africa’s instant cross-border payment revolution is underway. The question is whether regulation will enable or constrain it.

In a cross-border payment or remittance transaction, much as in domestic ones, customers want trust in the ecosystem, trust that the transaction will arrive instantly to the right beneficiary or payee, trust that they will know all costs involved (transaction cost and foreign exchange cost) prior to sending the transaction and that no hidden fees will apply at the receiving end of the payments. This trust framework applies also to cross-border Payment Service Providers (PSPs) who also want to trust the certainty of the regulatory frameworks governing cross-border payments to make the right investments. Similarly, regulators want to trust the capabilities of payment service providers to deliver innovative services while protecting consumers and the financial stability of countries. Cross-border payments in Africa remain cumbersome because regulatory frameworks differ widely across countries. Licensing requirements, operational rules, and compliance expectations vary so significantly that scaling cross‑border services becomes costly and inefficient for providers and customers alike. The result is predictable as consumers continue to pay more, providers innovate less and markets remain isolated. Without trust, cooperation stalls. Without cooperation, harmonization remains aspirational. Trust is the foundation upon which interoperability, shared oversight, and mutual recognition must be built.

With 54 countries, each with its own rules and regulation on payment services, regulatory uncertainty remains a compelling barrier for cross-border PSPs. Inconsistent Know Your Customer (KYC) and Anti Money Laundering (AML) frameworks create friction for providers and risk for regulators. For example, in Eswatini, customers are required to provide an identification document (ID or passport), proof of residence, and proof of income to send remittances exceeding E5000 (approximately $300). In Zimbabwe, customers are only required to present an identification document (ID, passport, or driver’s license) to send up to $5,000 per day. Both countries have PSPs connected to TCIB (Transaction Cleared on Immediate Basis), which is the regional IPS that facilitates cross‑border payments in the Southern Africa Development Community (SADC). However, the different regulatory requirements create operational complexities. Another challenge that compounds complexity and cost is around foreign exchange regimes and the different currencies involved in a cross-border payment transaction. Africa operates with more than 40 different currencies, most with limited convertibility. Harmonizing payment service regulations across Africa will catalyze and increase competition on cross-border payment services, bring innovative, faster and cheaper alternatives for individuals and MSMEs, and grow intra-africa trade corridors and remittance flows. Harmonized approach in AML framework is also essential to combat fraud, money laundering, and illicit financial flows.

The proposed Payment Service Directive for Africa (PSDA) is not a payment system, nor a technology construct. Far from it, the intent of the PSDA initiative is to rally regulators and stakeholders across Africa to build a framework for the harmonization of payment service regulations across the continent and create an enabling environment for instant cross-border payment. This directive, if implemented, will accelerate the AfCFTA ambitions to boost intra-Africa trade. The vision is that of a market where individuals and MSME can move money instantly anywhere, anyhow and anytime, regardless of where they are on the continent. The PSDA is designed to address the challenges of cross-border payments in Africa (speed, cost, transparency) by creating a unified regulatory framework aligned with Africa’s vision of a prosperous, integrated market. This is not theoretical. It is a direct response to the challenges faced by innovators, financial institutions, and consumers across the continent. Payments are a network industry. Without coordinated action, the network cannot scale.

Africa must chart its own path on this journey. The PSDA is not about importing external models, though it aspires to learn from lessons from the harmonization journey of payment services in Europe, Asia and the G20 roadmap on cross-border payments. The PSDA is about designing a framework that reflects Africa’s realities, ambitions, and innovation capacity. This is about crafting Africa’s own path — one that supports scale, competition, and inclusion across all markets. The journey needs not to be complex. By starting with a focus on designing foundational harmonization principles to align with, localizing global standards to Africa’s realities and above all ensuring that the framework puts customers and MSME at the centre. The momentum is real and the opportunity historic. Africa cannot advance payments reforms in silos. A payment services directive for Africa will only succeed if regulators, policymakers, private‑sector innovators, and development partners concert and regulators share best practices, champion advocacy for interoperability and proportionate licensing. Institutions also need to commit resources to policy drafting, capacity building, and implementation. At AfricaNenda Foundation, we remain driven by what is possible to unlock with enabling regulatory frameworks to scale instant cross-border payments in Africa and are focused on doing our part in supporting the journey.

This blog unpacks the key insights from our recent high-level webinar, From Fragmentation to Integration: The Case for a Payment Services Directive for Africa. Co-hosted by AfricaNenda Foundation and the Cambridge Centre for Alternative Finance, the session explored how policy and regulatory harmonization can unlock efficient, affordable, and inclusive retail cross-border payments across the continent. Watch the full webinar below for a deeper dive into the discussion.