Africa's payments boom exposes regulatory, infrastructure gaps

Nkebet Mesele, CEO and Founder of Intrinsic, has identified a significant tension in Africa's rapidly evolving payments ecosystem, where fast-paced innovation clashes with increasingly stringent regulatory frameworks. This dynamic is reshaping the sector's growth trajectory, influenced by sustainability concerns, infrastructure constraints, and rising compliance costs.

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One of the biggest gaps is the pace at which regulatory expectations evolve compared to the operational realities of businesses trying to scale across fragmented markets.

Mesele pointed out that while regulatory reforms aim to bolster trust and stability, they simultaneously intensify commercial pressures on businesses. "One of the biggest gaps is the pace at which regulatory expectations evolve compared to the operational realities of businesses trying to scale across fragmented markets," she told The PUNCH.

Payment operators across the continent are grappling with a multitude of challenges. These include inadequate infrastructure, diverse levels of digital adoption, foreign exchange volatility, and escalating fraud risks. These factors collectively drive up compliance expenses. "Many payment companies are operating across environments with infrastructure limitations, varying levels of digital maturity, foreign exchange pressures, and increasing fraud risks. Compliance is necessary, but it also comes with real operational costs," Mesele explained, noting that smaller firms may struggle to absorb these costs while remaining profitable.

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Many payment companies are operating across environments with infrastructure limitations, varying levels of digital maturity, foreign exchange pressures, and increasing fraud risks. Compliance is necessary, but it also comes with real operational costs.

Mesele clarified that the primary challenge is not regulation itself, which she deems essential for long-term stability. Instead, the issue lies in the practical implementation of these frameworks. "The challenge is not regulation itself. Strong regulation is important for trust and long-term ecosystem stability. The real issue is ensuring that regulatory frameworks are implemented with a practical understanding of how payment businesses actually operate." She added that firms face substantial infrastructure-related costs for reliability, fraud prevention, dispute resolution, and customer support, all while striving to maintain affordable services. Profitability pressures are also mounting in competitive markets with thin margins.

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The challenge is not regulation itself. Strong regulation is important for trust and long-term ecosystem stability. The real issue is ensuring that regulatory frameworks are implemented with a practical understanding of how payment businesses actually operate.