DOI: 10.69554/lvwg4726 ISSN: 1750-1814

No single rail wins: A corridor-based evaluation of cross-border payment performance in Sub-Saharan Africa

Mahadevan Balakrishnan, Divyarani Raghupatruni, R. Srinivasan
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In Q1 2025, cross-border remittance costs into Sub-Saharan Africa averaged 8.78 per cent for a US$200 transfer, nearly three times the UN Sustainable Development Goal target of 3 per cent. This gap persists despite advances in instant payments, stablecoins, card push networks and faster payment linkages. This paper argues the challenge is not a lack of payment innovation, but rather receiver-side structural constraints such as foreign exchange market depth, liquidity availability, regulatory frameworks, last-mile infrastructure and institutional coordination. Using a corridor-based ‘rubric versus rails’ framework, the paper evaluates four payment rails (correspondent banking, faster payment system linkages, stablecoins and card push payments) against five criteria (access, cost, speed, compliance quality, and settlement risk). It examines three representative Sub-Saharan African constraint patterns, namely, scale-constrained corridors, liquidity-constrained corridors and infrastructure-fragmented corridors. The analysis finds no single rail performs optimally across all dimensions. Correspondent banking maintains reach but remains costly. Faster payment system linkages are constrained by absent real-time FX, weak compliance harmonisation, and limited governance frameworks. Stablecoins show promise in addressing FX scarcity and mobile-first delivery gaps, but depend on last-mile infrastructure. Card push rails remain supplementary, constrained by low card penetration and mobile money dominance. The paper argues that cross-border payments will evolve toward layered multi-rail architectures tailored to corridor conditions. Cost reduction will come from orchestration across rails, not rail replacement. For Sub-Saharan Africa, regional aggregation models such as PAPSS, combined with stablecoin-enabled FX settlement and instant-payment last-mile delivery, offer a more credible path to G20 targets than bilateral rail optimisation. This paper is Part I of a two-part series. Part II applies the framework to Latin America. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.

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