The successful modernisation of a country’s domestic payments infrastructure onto faster, instant payment rails like South Africa’s PayShap does not always translate into similar success in the cross-border payments space – and regulation is often a bottleneck.
Speaking to TechCentral in an interview on Wednesday, Emanuela Saccarola, head of global cross-border payments at Citibank, said countries such as India and Brazil, which have successfully made their domestic payments fast and seamless through modernised infrastructure, continue to struggle to achieve similar levels of proficiency in the cross-border space. This is because their regulatory environments are not as enabling as they could be.
“There are a lot of people who like to think of cross-border payments as one [monolithic] thing, but the reality is that it is a combination of multiple corridors made up of approximately 200 markets around the world and 20 000 combinations of cross-border payments,” said Saccarola.
“Ideally, when you look at cross-border payments, you should be able to say there are two seamless domestic payment infrastructures with a seamless foreign exchange service in between. Where we achieve that is where the ecosystems in the two domestic countries are seamless and operate with modernised infrastructure and probably very light regulation.”
Cross-border payments are important to US-headquartered Citibank, whose South African operations date back to 1920 and are focused on corporate and institutional banking. Using its presence in over 200 jurisdictions worldwide, Citibank offers its clients, including some of South Africa’s big banks and fintechs like M-Pesa in Kenya, the underlying infrastructure to process and clear cross-border payments across numerous corridors with differing regulatory regimes.
Saccarola said the efficiency of cross-border payments differs from country to country, with a payment from Singapore to Thailand, for example, differing to one from the US to Brazil. Other than differences in the “heaviness” or “lightness” of the regulatory regimes of each jurisdiction involved in the transaction, the legal systems used and how financial concepts are fundamentally defined play a role in determining how seamless the transaction will be.
Reserve Bank goals
This is the one of the challenges facing the South African Reserve Bank as it aims to harmonise the regulatory landscape across the Southern African Development Community. The goals of the Reserve Bank and its regional counterparts are to digitise the cash-driven remittances market, thereby making it safer and cheaper to move money across the region and simultaneously increase intra-regional trade.
The modernised technology infrastructure facilitating these changes is called Transactions Cleared on an Immediate Basis (TCIB), which is built and managed by PayInc – previously known as BankservAfrica – and is similar to TCIB’s domestic equivalent, PayShap. According to Sacarrola, Citibank’s global experience shows that “technology is never the problem” whenever efforts to make cross-border payments more efficient are made.
“Some countries, continents and areas are better than others. There are lots of components to getting harmonisation right and there have been a lot of industry-led proofs of concept around bilateral and multilateral platforms and how to interlink different payment systems,” said Saccarola.
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“The technology is never the problem; it is how you define the rules of that scheme. What are the legal interactions, for example, between banks that sit in Zambia and banks that sit in South Africa? What licences do they need? Are they the same in each country? All those things need to be defined.”
Adding more complexity to regulators ensuring their respective financial systems remain stable as they evolve is the speed at which the financial sector is changing. Fintechs were the first to disrupt the sector and Saccarola admits the industry “needed them to”, adding that the sector “needed the innovation”.
New payment methods and the digitisation of currency – through cryptocurrencies, stablecoins and central bank digital currencies – mean regulators must adapt to a shifting financial ecosystem at a rapid pace. To keep pace, regulators, banks and other players in the financial ecosystem must work together, she said.
“Collaboration also has to happen in the public sector. Regulators have a really big job right now because everything is moving quickly and we have to empathise with them, the regulatory scheme managers and central banks.
“Regulators very often think locally first and then, sometimes, globally. Sometimes the banks, like Citibank, are then needed to advocate and explain best practices or talk to the regulator to have a dialogue to say, ‘Hey, you need to think about cross border’. Some regulators are very receptive and they then amend the rule book, or they potentially evolve the scheme rules,” said Saccarola.
An enabling regulatory environment with innovative participating financial ecosystem players achieves little if adoption on the ground is lagging. Saccarola said Africa’s relatively young population is quick to adopt digital payment methods and wallets, allowing the continent to leapfrog some of the intervening technologies, like bank cards, used extensively in more mature markets.
She added that countries with older populations are less adaptive to change, citing the US, where cheques remain a common way to facilitate payments, and Europe, where “credit card culture” dominates. But Africa has other issues hampering the adoption of new technologies for cross-border payments.
“The key to any success story is adoption, and adoption only happens either with incentives or if a regulator says something is mandatory and everybody needs to come in and participate.
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“Other aspects of the infrastructure outside of the payments’ ecosystem are relevant. You need to have a mobile phone and internet access, which is maybe not a very big problem in South Africa, [but is missing] in other parts of the continent,” said Saccarola. –© 2025 NewsCentral Media
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