EXCLUSIVE: “Setting African Payment Flows Free” – Nick Miles, Freemarket; Malaika Ademola-Majekodunmi, Fincra and Khibar Rassul, Axiym in ‘The Fintech Magazine’

Freemarket is working alongside Axiym and Fincra on improving cross-border payments in potentially one of the biggest wealth-creating regions in the world, But technology is just one part of the solution. The other is trust.

Africa, a sprawling continent of 54 countries with a fast-rising population now standing at 1.5 billion, is a vast melting pot of hugely contrasting economies and cultures. Its sheer diversity provides a complicated and challenging backdrop for trade, including financial services and cross-border money movements, with many banks outside of Africa, perhaps unfairly at times, still labelling countries within it as being high risk. Subsequently, money transfer fees into Sub Saharan countries were levied at 8.78 per cent compared to a global average of 6.49 per cent, according to the World Bank, for the last quarter of 2024.

Costs for remitting into or out of some individual countries rose to as much as 15 per cent, though for others in North Africa, they were cheaper than Europe. But huge opportunities abound. Africa has the world’s youngest population, with a median age of a shade under 20, which provides a huge, digitally native workforce ready and willing to adapt to new technologies. As such, it’s providing a rich seam of remote workers for international companies to hire, particularly in information and communications technologies and finance, notably increasing spending power.

The continent also contains some of the world’s fastest-growing markets where diversification into new industries is spurring innovation and further attracting investment and, by extension, increased trade in services and products. All of that combined is increasing the demand by businesses and individuals across Africa for faster and cheaper means of payments. One UK-based fintech helping to satisfy that is Freemarket. A specialist in global money movement, it provides the infrastructure for partners on the ground in Africa who understand the continent’s complex regulatory and cultural differences when it comes to moving money.

Among the companies in the ecosystem that Freemarket is building are Fincra, a Nigerian payment solutions provider, and Axiym, a financial infrastructure provider with headquarters in Dubai, and particular experience in the busy and expanding Africa/Asia trade corridor. Fincra was founded in Lagos in 2021 with an ambitious plan to solve the complex payments challenges for businesses in Africa and enable borderless payments across the globe. Axiym facilitates global payments built on the Avalanche blockchain and specialises in stablecoins, which are pegged to a regulated fiat currency, such as the US dollar.

Explaining Fincra’s mission, Malaika (MK) Ademola-Majekodunmi, Vice President, Global Payments Systems, says: “It is, in essence, to build the rails that integrate Africa – with itself, and Africa globally. Because Africa is like pieces of a cake. A lot of its resources were sliced up for the benefit of others, rather than the people of Africa. And so the fragmentation is deeply rooted in how the continent operates, how each country operates, how each market behaves. Even in terms of regulation, they are so different.

“We chose this challenge because of what it would mean for us as a people. New innovations, new technologies, new settlement systems, like stablecoins and cross-border solutions, and infrastructures that we get from our partners are helping us facilitate this integration, because, for us to grow as an economy, part of what needs to be fixed is how money moves across borders – how I send money from Nigeria to Kenya, or from Nigeria to my supplier in China.

“The rails are so fragmented as it stands right now. If I want to use the regular banking system to send through Swift, for example, most banks here cap it at $10,000. So, if I want to do a $50,000 transaction, I’m going to go each day to the bank and make that $10,000 transaction for five days in a row, and then I’m going to pay Swift charges for all those five days.

“That’s crazy. So, when you see how disruptive stablecoin is – how you can move money without all the bureaucracy or limitations but with compliance – you can appreciate why we went to that next phase of integration. It will allow Africa to come together as a whole, to grow the continent, grow the globe, by facilitating payment flows across borders.”

Trading places

Trade between Africa and Asia alone is valued at $1trillion-plus annually, while inter-country money movement, be it buying or selling goods, or individuals sending money to family and friends, is estimated at up to $100billion annually.

“A huge chunk – around 70 per cent – of the population is under 30 years old,” continues Ademola-Majekodunmi. “They’re all mobile first. They’re all digital. They’re all young, hustling, trying to make money. That already creates demand in terms of payment, buying and selling.

“Then there’s the whole inbound remittance market. That’s a $100billion market where there’s the need for Africans to receive money from other Africans in the diaspora, trying to send money back home to their friends, to their family members, or maybe even for making purchases.

“And then you see there’s global demand for products and goods into Africa, and from Africa to other countries. The Africa-Asia trade is over a trillion dollars right now, and a lot of what we’re doing at Fincra is facilitating that trade. The demand to make payments from Africa into China, for instance, is creating the need for versatile payment solutions and very diverse products.”

Khibar Rassul, Co-founder and CEO at Axiym, agrees that fast and cost-effective cross-border payments are key drivers for emerging markets.

“It allows them to engage in commerce on personal, business and macroeconomic levels,” he says. “And I think that is where payment companies don’t get enough credit because, without them, you don’t get that commerce, those trades, those shipments. You don’t get those products and services to cross borders.”

Emerging economies in Africa are not shackled by legacy systems, says Rassul, which means they can, and are, moving fast to improve money flows.

“There are no well-established procedures, processes, and players. So it’s really a clean slate for people to go in and find better ways to do things. That’s what makes Africa very exciting for us,” he says. “You can really innovate. You can take advantage of all kinds of technology, new processes, new innovations, new payment methods, whether it’s stablecoins or different payment aggregators, real-time settlements or any and all of the other tools that have emerged within the fintech space. You can put them together to solve problems, and you don’t have those legacy chains around your ankles that hold you back.”

But for all that to succeed, you need a trusted global infrastructure, like Freemarket’s, underpinning it.

“That’s the core piece in enabling those adoptions,” says Rassul. “Because, if these mobile-based experiences were unreliable and did not work out, you would not have adoption among users. They would still be more comfortable using the branches and the banks.”

Respecting the boundaries

Freemarket’s approach is founded on a bedrock of regulatory compliance, which is core to its business of moving money for industries that are often considered high risk by banks.

“We support CFD brokers, digital asset clients, MSBs, PSPs, gaming, gambling, and they’ve all got different risk profiles,” says Freemarket’s Head of Relationship Management, Nick Miles. “It’s key that we work very closely with banking partners because, from a regulatory perspective, we are licenced, and our clients are licenced, registered, and domiciled in certain jurisdictions – but where it’s not always simple to just send a payment from A to B.

“Each banking partner we use has its own risk appetite. It would be foolish to say every partner could facilitate every single flow we want to put through, so it’s also hugely important to understand a banking partner’s own risk appetite and really understand that what I’m sending is a) something they can accept, and b) something they’ll process and then settle. It’s all about listening, learning, and understanding what we can onwards offer to clients to make sure we’re within our own – and their – regulation.

“Ultimately, people want to move money around the world, so how can we help?”

For Ademola-Majekodunmi that strict rule of compliance builds the vital bond of trust needed to tackle Fincra’s mission and have a functioning ecosystem.

“There has to be a compliance-first approach. It’s the make-or-break for everything we design,” she says. “And the reason I say this is, despite the challenges that regulation may pose on your solution, what’s really behind that is trust or lack of trust. What these regulators are trying to do, in essence, is just protect customers, protect their citizens.

“Building solutions with trust in mind has made it easier for us to break into new markets and it’s now a foundational thought – ‘OK, we know that this is a particular concern for this market… East Africa is a bit more progressive, for example, while West Africa is a bit trickier. So, how do we adapt this solution for each of these markets, knowing the problem that they are truly trying to solve is that trust element?’.”

For Rassul, regulatory compliance also offers Axiym a gateway to growth.

“A lot of the gatekeepers are, actually, the underlying banks. Their risk appetites limit what you can do, how you can do it, how you can innovate,” he says. “Being licenced and regulated usually allows you to elevate at least some of those risk factors that these partners you’re working with experience; it actually enables you to do more. So, while you might slow innovation a little bit on one side, you’re opening bigger doors on the other.

“Yes, there are inefficiencies, but getting properly regulated makes you more compatible with underlying banks and flow partners, allows you to enter into places and payment ecosystems and access payment services that you wouldn’t otherwise be able to do.”

A prime example of that is Axiym’s use of stablecoins for global payment flows, which overcomes the capital constraints of traditional pre-funding. Demand for stablecoin-based transactions is also a trend experienced by Fincra since it forged its partnership with Freemarket, as its customers look for not only speedier settlement but also ways to avoid volatility in FX markets, which, in Africa, can be particularly unpredictable.

“A lot of businesses that we’re working with are pivoting to use stablecoins as a settlement currency because of the challenges they are facing with the regular banking rails or the correspondent banks and the delays that theyexperience,” says Ademola-Majekodunmi.

It’s all about technology solving problems, driving efficiencies, and then trickling down value to customers, adds Rassul.

“Whether you’re automating things with AI or whether you’re using stablecoin for settlements or using virtual IBANs and internal ledgers for the instant settlements within a payment ecosystem, all of these pieces reflect the drive the industry has to find better ways to solve problems,” he says. “And as these technologies become more mature, they can be plugged into more use cases.”

A matter of trust

But even in such a dynamic technology market, it’s human relationships that are at the heart of successful ecosystem of players. Freemarket, Fincra and Axiym know they can’t succeed alone and so their relationship goes beyond the purely transactional.

“People still have an idea that money gets carried across borders or across countries physically,” says Freemarket’s Miles. “In reality, a currency never actually leaves the domicile where it sits. It’s effectively a reflection of a balance, a debit or credit in the jurisdiction of the local payment system where the underlying bank account is opened in that party’s name. With sterling, for example, it’s a reflection of the Bank of England going through different beneficiary or correspondent banks. So, you need the assurance that it’s going to get to the end beneficiary in as quick a time as possible, when it’s not necessarily going from A to B, but from A to B to C to D.

“We’re a trusted party for those payments – our partners trust us to get them to the end beneficiary in a very efficient time span.

“In effect, we’re creating an internal payment network designed to harness collective strengths – an ecosystem that makes moving money faster, cheaper, and smarter through true collaboration. If we have a client who would like help in certain African countries, for example, we would most likely say, ‘why don’t you have a conversation with Fincra, as they’re better equipped to do this for you?’.

“Fincra and Axiym are the true experts in their field and in the jurisdictions they live and work in,” adds Miles. “We give them the opportunity to integrate with us fairly seamlessly; to be able to provide banking rails in countries and currencies that are not as easy to get into.

“Ultimately, they’re kind of agnostic as to how they settle as long as they go through a trusted party very quickly. But it’s also about realising how we are complementary. They’re clients, yes, but we like to mutually collaborate to get the best out of each other.

“It goes back to truly being a relationship-led organisation, and at Freemarket we’re passionate about that. It is our bread and butter.”

Rassul agrees: “Really successful local partners are the ones who understand that it comes down to building long-term relationships. With Fincra and Freemarket, we’re moving each other’s money, so, you have to trust and like the people you work with. It is very personal in many ways, and a lot of businesses that fail in this industry do so because they treat moving money as a technology problem – ‘let me build some APIs’. Or treat it as a purely regulation issue – ‘let me get some licences’.

“And there are people who are good at one thing and are licenced in one place, so you engage with them for this, and you have to engage with someone else for that.

“Volumes go up and down. FX rates go up and down. And payment fees go up and down. But what stays around is the trust that you build with people.”

This article was published in The Fintech Magazine Issue #37, Page 48-50

The post EXCLUSIVE: “Setting African Payment Flows Free” – Nick Miles, Freemarket; Malaika Ademola-Majekodunmi, Fincra and Khibar Rassul, Axiym in ‘The Fintech Magazine’ appeared first on FF News | Fintech Finance.