No single rail wins: A corridor-based evaluation of cross-border payment performance in Sub-Saharan Africa
Abstract
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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Author's Biography
Mahadevan Balakrishnan is a postdoctoral research fellow at the Indian Institute of Management’s Centre for Digital Public Goods. He has played key roles in the digital transformation of payments in India, notably as Chief Operating Officer of the National Payments Corporation of India, where he oversaw the development of innovations such as IMPS (the platform underlying UPI and the Instant Payment System), Aadhaar-enabled payments, the National Automated Clearing House and the RuPay domestic card scheme. Dr Mahadevan has also worked with the World Bank, advising developing countries on strengthening financial infrastructure and digital payment ecosystems. With more than three decades of experience gained at leading banks and major institutions, he brings deep expertise at the nexus of policy, technology and institutional design. Dr Mahadevan holds an MBA in finance, a master’s in political science and public administration, a master’s in bank management and a PhD in finance and payments. He has written numerous articles for national and international journals and serves on the editorial boards of two leading journals focused on payments and banking. His research interests include payments, particularly fast and instant payments, as well as digital public infrastructure.
Divyarani Raghupatruni is Senior Director of Product, Data and Orchestration at Alacriti, where she leads strategy for faster payments, stablecoins and AI-enabled infrastructure for financial institutions. She has over 15 years of experience in FinTech and payments, including prior experience at Block (Square) and Transfast, a cross-border payments platform later acquired by Mastercard. She participates in industry working groups and collaborative initiatives convened by the US Faster Payments Council focused on interoperability and digital assets. Her practitioner-oriented research is regularly published, and she speaks at industry conferences on cross-border payments, digital money, artificial intelligence and financial market infrastructure.
R. Srinivasan is Professor of Strategy and Chairperson of the Centre for Digital Public Goods at the Indian Institute of Management Bangalore. His areas of research and teaching include digital public goods and digital public infrastructure, protocols and open networks, and platform business models. He has written many articles for international journals, in addition to books on strategy and platform businesses, and he engages with both industry and government on consulting and policy assignments.
