APIs fill the payment gap for sales in Africa

Across the African continent, cross-border payments are slow, expensive and highly fragmented.

As a result of this tripartite challenge, “there could be 16 to 18 hubs for a payment to reach the last mile in some countries”, Jess Anunafounder and CEO of a technology company based in Nigeria Klashasaid PYMNTS in an interview.

The lack of e-commerce payment infrastructure also poses a problem not only for global retailers who are unable to accept payments in African currencies and local currencies, but also for the millions of African consumers seeking frictionless access to global goods and services using African payment methods. .

It is this two-sided dilemma that Klasha seeks to solve by building the technological infrastructure needed to facilitate cross-border trade in Africa.

Part of its aim, Anuna explained, is to enable international merchants, including business-to-business (B2B) wholesalers and retailers, to scale seamlessly on the continent through an application programming interface (API). and to access the millions of consumers who want to patronize their products, but are unable to do so.

Read more: New Klasha links allow businesses to accept cross-border funds

Last year, the 2018-established Lagos-based company rolled out the Klasha Payment Link, a no-code method that enables B2B and business-to-consumer (B2C) merchant customers in Africa to accept payments from international businesses – and vice versa – without the need for an app, website or any coding knowledge.

Read also: Klasha lands $2.4m for African cross-border trade

“African or international matches can sign up for a Klasha business account and create a payment link, then send that link on WhatsApp or WeChat or email or Instagram [direct message],” she said. “Consumers in Africa can pay through this link in African currencies and monetary methods, and then we pay the merchant in hard G20 currencies. [such as] dollars, pounds, Indian rupees or Chinese yen.

Lack of cross-border solutions

However, it was not all smooth sailing.

Currently, only 22% of banks in the region offer cross-border solutions and “there are not many banks that have the infrastructure to be able to make payments in the more than 130 countries that we currently pay out to.”, Anuna pointed out.

So for companies like Klasha that collect payments in African currencies and remit G20 currencies, sourcing liquidity against the African currencies they receive can be an uphill battle.

As a solution, the company is pinning its hopes on a strong cash management system to be able to predict the volume merchants and customers will need to make on a weekly or monthly basis.

But there are also the long processing times that they regularly have to deal with. “The certainty of the speed was quite difficult to determine, [especially] given the number of stops along the value chain. A bank might say two to three days, but it might end up being 14 days. This is [also] been quite difficult for us to protect ourselves,” she noted.

This, along with managing complex Anti-Money Laundering (AML) related processes and meeting compliance requirements, sanction checks and beneficiary confirmation, are other issues that cause friction in day-to-day management of business operations, Anuna added.

Frictionless end-to-end payment experience

On the positive side, she pointed to increased investment in the digital disruption of international remittances and instant payment infrastructure as indications that progress is being made in the cross-border money movement space.

One of these improvements is the much-needed reduction in the costs of cross-border payments and intermediaries. “If I send money to Southeast Asia, there are usually 16 to 18 payment hubs we have to go through, but we’ve seen it drop to four to six sometimes,” she said. declared.

For Klasha, it’s also about ensuring they can deliver a seamless customer experience by leveraging integrated financing and integrated payment systems to reduce last-mile delivery time for their customers.

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“Generally what we’ve seen is that many flags are raised after the payout is triggered and [sometimes there are] documents that need to be submitted that were not communicated to us beforehand,” Anuna said, adding that streamlining end-to-end last mile delivery is a challenge that many startups like Klasha are tackling head-on.

Finally, securing payments and innovation around more transparent know-your-customer (KYC) verification is gaining momentum on the continent as more FinTechs emerge and cross-border payments become more crucial to accessing the global economy.

Overall, providing a seamless and frictionless end-to-end cross-border payment experience for B2B and B2C merchants selling in Africa will be key to ensuring that African consumers are not deprived of their share of the global e-commerce pie. .

“We want Africans to remain globally competitive and through this, we must give them frictionless access to global goods and services. [to ensure they] stay competitive with peers [in other regions]“, said Anuna.

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About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.

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