Payment Processing Basics

#Africa bleeds $5B a year not to #corruption or #mismanagement, but just to move money within its own borders. Example: A Kenyan business paying a Ugandan supplier. Instead of Nairobi → Kampala, money goes: Nairobi → USD conversion (1–2%). USD routed via New York/London ($20–50 fee). USD → Ugandan shillings (another 1–2%). By the time a $26,000 invoice is paid, $500–1,000 is gone. Whilst we may be denied visas, our money travels freely through New York. And it’s not just trade: Africa’s #diaspora sends $95B home each year, yet pays the world’s highest remittance costs. -We pay the highest cost for credit. -We pay the highest cost for payments. -We pay the highest cost to send our own money home. It’s not inefficiency. It’s design. The #GlobalFinancialSystem wasn’t built for us. The good news? Solutions exist. #PAPSS (Pan-African Payment and Settlement System) is already live linking 15 central banks, 150 commercial banks, and 14 payment switches, with the capacity to handle $300B in intra-African trade annually. Through PAPSS, that same Kenya–Uganda  transaction could  look very different: -One direct conversion from KES → UGX (0.2–0.5% spread). -Settlement netted via African central banks. -Funds received in hours, not days. Estimated cost: $60–150.  Potential savings: $500–950 on a single $26,000 payment. No detours. Value stays in Africa. The challenge isn’t invention. It’s implementation. One Africa. One market. One #payment system. AI image below*

Payments have evolved from paper and plastic to APIs and orchestration - giving rise to a new breed of players that simplify the complexity and connect the dots behind the scenes. Here's how we got here. 𝟭. 𝗜𝗻 𝘁𝗵𝗲 𝗽𝗿𝗲-𝟭𝟵𝟵𝟬𝘀 𝗲𝗿𝗮, banks owned the entire payments value chain -acquiring, processing, settlement. Merchant onboarding was complex, and domestic clearing systems ruled. 𝟮. 𝗧𝗵𝗲 𝗿𝗶𝘀𝗲 𝗼𝗳 𝗲-𝗰𝗼𝗺𝗺𝗲𝗿𝗰𝗲 in the late 1990s changed everything. Players like PayPal and Authorize made online payments possible, while banks began exiting the acquiring space or partnering with processors to keep up with demand. 𝟯. 𝗕𝗲𝘁𝘄𝗲𝗲𝗻 𝟮𝟬𝟬𝟬 𝗮𝗻𝗱 𝟮𝟬𝟭𝟬, specialized gateways and regional wallets began to scale, offering merchants greater flexibility and control. The launch of SEPA in Europe marked a push toward payment harmonization, while non-bank players started building infrastructure that bypassed traditional acquiring models altogether. 𝟰. 𝗧𝗵𝗲 𝘀𝗵𝗶𝗳𝘁 𝘁𝗼 𝗔𝗣𝗜-𝗱𝗿𝗶𝘃𝗲𝗻 𝗶𝗻𝗳𝗿𝗮𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 transformed payments from siloed systems into modular, developer-friendly tools. Merchant onboarding became faster, integrations simpler, and innovation more scalable. Open Banking regulations enabled direct access to bank data, while new credit models redefined consumer behavior. Payments evolved into a flexible, programmable layer of the digital economy. 𝟱. 𝗧𝗼𝗱𝗮𝘆, we’re in the age of seamless integration. Payments are embedded in everything - from ride-hailing apps to SuperApps. Real-time rails like SEPA Instant, UPI and PIX are live. CBDCs are in pilot. However, as payment ecosystems grow more fragmented - with new methods, regional schemes, compliance layers, and fraud risks -complexity has become a major bottleneck for merchants, fintechs, and even banks. Integrating multiple providers, maintaining uptime across systems, and ensuring regulatory compliance isn't just costly - it's unsustainable without the right foundation. This is where a new breed of infrastructure players like 𝗔𝗸𝘂𝗿𝗮𝘁𝗲𝗰𝗼 fit in - offering the tools to simplify complexity and still retain control. • 𝗪𝗵𝗶𝘁𝗲-𝗹𝗮𝗯𝗲𝗹 𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗴𝗮𝘁𝗲𝘄𝗮𝘆𝘀 let banks, PSPs, and fintechs launch their own branded platforms fast - without building from scratch. • 𝗣𝗮𝘆𝗺𝗲𝗻𝘁 𝗼𝗿𝗰𝗵𝗲𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 enables merchants to route transactions dynamically across multiple acquirers, reducing costs and failed payments while improving UX. • 𝗕𝗮𝗻𝗸𝘀 can embed API-driven acquiring services into their offerings without the burden of a full-scale tech overhaul. In a world where growth brings fragmentation, the real challenge isn’t enabling payments - it’s managing them. The advantage will lie with infrastructure that can unify complexity, adapt in real time, and scale across borders without adding friction. Opinions: my own, Graphic source: Akurateco Payment Hub Subscribe to my newsletter: https://lnkd.in/dkqhnxdg

Europe’s “local hero” payment systems are quietly doing what many thought impossible… They’re starting to outgrow cards. Europe still has 43+ domestic mobile payment systems, and despite consolidation, they’re becoming stronger, not weaker. Here are the key shifts happening right now: 👉 EPI Company’s Wero is reshaping the landscape ► giropay (Germany 🇩🇪) has been sunset to make way for Wero ► Paylib (France 🇫🇷) users are migrating to Wero for P2P ► Pivo (Finland 🇫🇮) shut down, with OP + Nordea doubling down on Siirto ► Lydia is refocusing on P2P as Sumeria takes over e-commerce & POS 👉 Tap-to-Pay changes everything Since the European Commission forced Apple to open the NFC interface in 2024, domestic wallets have rushed to launch tap-to-pay alternatives. This is a massive usability upgrade, moving from QR codes to an OEM-style experience. 👉 Cross-border acceptance is coming Several domestic systems are partnering across markets to extend reach beyond national borders. Then there is the rise of Europe’s “local heroes”: Blik, Twint, MB Way, Swish, Vipps and others continue to dominate their markets, some still growing 50%+ per year. Even the more mature players (Swish, Vipps) only slowed because they’ve reached near-total penetration. Between 2017–2023, these local A2A systems grew much faster than card payments in their respective markets. And the data tells a powerful story: ► A2A mobile transactions already equal 7%–25% of card volumes in some markets ► P2P remains a key driver of adoption and frequency ► Growth is expected to remain above market for the next 3–5 years Source/more info: Arkwright Consulting - https://lnkd.in/dS5e-7wf A clear signal for Europe’s future. If you connect all the dots: ✔ Local systems keep scaling ✔ Tap-to-pay is unlocking mainstream usage ✔ A2A economics are far superior to cards ✔ Consumers already trust these local champions Europe is becoming one of the strongest regions globally for account-based payments, and the shift away from cards is no longer theoretical. It’s happening. What’s your view — will A2A payments take a double-digit share from cards by 2030?

Africa’s Cross-Border Payments Are at a Turning Point — But Can Digital Fix the “Last Mile”? Africa’s $200+ billion* annual cross-border payments market is growing fast, but cost, speed, and transparency gaps still hold it back. Citi’s latest research shows that digital rails — from ISO 20022 to regional schemes like PAPSS — could change the game. The question: will the ecosystem move together, or build new silos? ⸻ THEMES • Speed & Transparency Are Now Baseline Expectations — Swift GPI and ISO 20022 adoption are giving banks and corporates package-tracking-style visibility on payments. • Regulators Are Raising the Stakes — Multiple central banks are piloting instant cross-border settlement models to reduce reliance on USD/EUR corridors. • Fintechs Are Closing Merchant Gaps — Players like Yoco are targeting SMEs with POS, e-commerce, and reconciliation tools to smooth the last mile. VARIATIONS • PAPSS in West Africa enables real-time settlement in local currencies — but adoption remains uneven. • Southern Africa still leans on legacy correspondent models, with higher friction and cost. • BRICS Pay pilots could bypass traditional rails entirely, but risk fragmentation if not interoperable. IMPLICATIONS • Banks risk losing corporate flows to fintechs if they don’t match speed and user experience. • Regional rails will only succeed if they integrate seamlessly with global systems. • Digital assets (stablecoins, CBDCs) offer potential cost savings but will stall without clear regulatory alignment. WHAT’S NEXT The future hinges on ecosystem orchestration, not just tech. To truly modernise, Africa’s cross-border payments must combine: 1. Common data standards (ISO 20022 end-to-end) 2. Interoperable domestic and regional scheme 3. Regulatory frameworks that enable innovation without silos ⸻ The real disruptor isn’t a single new rail — it’s multi-rail intelligence that routes payments dynamically for cost, speed, and compliance, in real time. Opinions: my own. Source: Citi, “Cross-Border Payments in Africa” #payments #africa #iso20022 #digitalpayments

In this episode of the Wrap Up Podcast, I’m joined by Matt Marcus, CEO, and Sam A., CTO of Modern Treasury. We break down how Modern Treasury evolved from an API-first bank payments platform into a full-stack, multi-rail infrastructure provider supporting ACH, wires, RTP, FedNow, and stablecoins under a single unified ledger. We discuss: - How Modern Treasury’s new integrated payments product enables companies to launch in days - Why compliance ownership is shifting back to infrastructure providers - The role of AI in engineering productivity, compliance workflows, and fraud detection - Lessons from Synapse and the importance of immutable, double-entry ledgers - What companies must assess when choosing an infrastructure partner - Why instant, cheap, and usable payments will define the next decade This conversation goes deep into payment stack architecture, embedded finance evolution, stablecoin integration, and what the future of money movement actually looks like at scale. If you operate in fintech, treasury, embedded finance, or payments infrastructure, this episode unpacks where the rails are heading — and what it takes to build on top of them.

Point-of-Sale systems are no longer just about payments. They have become real-time connected platforms that manage inventory, personalize customer experiences, and feed business intelligence. Thanks to mobile payment providers like Square, SumUp, and Shopify, even the smallest merchants can now access capabilities that used to be limited to enterprise retailers. At the same time, #datastreaming with #ApacheKafka and #ApacheFlink is transforming how #retail operates. Event-driven architectures enable instant insights and automated actions across every store, website, and #supplychain partner. Stock levels update in real time, #frauddetection models run instantly, and loyalty points are applied the moment a customer pays. SumUp is a great example. They process millions of transactions daily in over 30 countries. By adopting Confluent's cloud service, they power critical use cases such as fraud detection, CRM updates, and machine learning at scale. This ensures compliance, resilience, and fast developer delivery across more than 20 teams. The next step is Unified Commerce. All channels - stores, online, apps, marketplaces - operating on a single real-time data foundation. Data streaming makes this possible and will soon be the backbone for #AgenticAI in POS systems. Future POS will not only handle payments but also recommend upsells, replenish inventory automatically, and prevent fraud in real time. For small and medium-sized merchants, this means access to enterprise-grade intelligence without enterprise complexity. For IT leaders, it means staying ahead in a competitive, data-driven retail market. More details in my latest blog post: https://lnkd.in/ePPTSnqZ

Malaysia's cross-border QR payments grew 550% in 2024. Thailand's grew 300%. Philippines: 467% volume, 372% value. The fintechs didn't build the rails. They built on them. → Adoption data • Thailand PromptPay: 350 transactions per person per year. 2019: 40 per person. • Malaysia e-money: 8% of annual GDP. • Singapore: 300 e-money transactions per person. • Thailand e-money accounts: 50% of adults. ASEAN average: 20%. • Asia cross-border payments: 12.8 billion transactions (2024) → 23.8 billion projected (2032). → What drives it (IMF regression) IMF analyzed Thailand's cross-border QR flows across seven countries, monthly data 2020-2024. Positive correlations (statistically significant): • Higher USD volatility → higher local currency QR usage • More tourism → higher QR volume • Fewer credit cards → higher QR adoption • Fewer bank branches → higher QR adoption QR payments substitute for cards and traditional banking. Users choose local currency settlement when USD creates risk. → Infrastructure economics • Remittance cost (East Asia): 5.8% to send $200. G20 target: 3.0%. • Credit cards: 2-3 day settlement, dollar conversion, FX risk. • QR: real-time, local currency, transparent rates. Intra-ASEAN tourism: 42% of visitors (up from 36% in 2019). Tourism = 8% of regional GDP, 12% of employment. Every QR payment is margin correspondent banking loses. → The models • Bilateral model (current): Thailand has 9 separate cross-border QR connections. Each required individual negotiation, technical integration, bilateral agreement. • Multilateral model (2027): Project Nexus connects 5 countries (India, Thailand, Malaysia, Singapore, Philippines) through one hub. One connection = access to all five systems. • Stablecoin model: 99% of stablecoins backed by USD. Every cross-border stablecoin payment reinforces dollar settlement infrastructure. → What the data proves • Central banks built: PromptPay, QRIS, PayNow, UPI. • Fintechs built: apps, merchant acceptance, interfaces. • Result: 8x growth Thailand. 550% Malaysia. 467% Philippines. Zero fintechs raised billions to rebuild settlement rails. IMF analyzed 60 months of payment flows. The conclusion: infrastructure that eliminates dollar conversion and intermediaries changes user behavior. Fintech is still building on top of intermediaries. The question isn't whether infrastructure works. It's whether the rest of the world builds it or keeps funding innovation on rent-extracting rails.

The Infrastructure Mismatch Africa is now a $3.3 trillion economy. That number alone should end every lazy “frontier market” conversation quickly But here’s what this GDP map doesn’t show: ◾️ $1.43 trillion flowed through mobile money wallets across the continent in 2025; yet 75% of registered accounts sit inactive every month ◾️ Cross-border payments between African nations still cost 7–20% of transaction value and take 3–5 days to clear The GDP is real but the financial infrastructure underneath it is not keeping pace Look beyond the big 3️⃣ ➖ South Africa, Egypt, and Nigeria account for 35% of the continent’s output but what’s more interesting is the tier forming beneath them which includes the likes of - Kenya at $141B, Ethiopia at $126B, Ghana and Côte d’Ivoire both above $110B, Tanzania approaching $100B. Five or more economies have crossed the $100B threshold in the last cycle alone The above isn’t a “rising Africa” narrative, it’s a structural shift that demands a different question: who builds the financial rails for a continent where GDP is scaling faster than the payment systems, identity infrastructure, and cross-border settlement mechanisms required to capture the value? PAPSS is connecting 160+ banks for local-currency cross-border settlement & AfCFTA’s Digital Trade Protocol is laying regulatory groundwork but 350m adults remain fully unbanked, and 90% of transactions are still in cash The continent doesn’t have a growth problem, it has a plumbing problem and the institutions or fintechs that solve it won’t just serve a market, they’ll define one #Africa #Fintech #Payments

The payments stack is quietly being rebuilt — and the latest move from Visa shows how fast that transformation is accelerating. Visa Intelligent Authorization is a new capability on the Visa Acceptance Platform that allows acquirers to modernize payment processing through a single API integration, capable of processing transactions across multiple card networks. On the surface, this looks like an infrastructure upgrade. But the implications for the payments ecosystem are far bigger. 1️⃣ Payments infrastructure is becoming “API-first.” Instead of banks or acquirers building and maintaining their own authorization stacks, they can plug into modular infrastructure through a single API. This significantly reduces the cost and complexity of modernization. 2️⃣ Orchestration is becoming the new battleground. As payment flows become more complex — with wallets, A2A, stablecoins and AI-driven commerce entering the mix — the ability to intelligently route and authorize transactions across networks will be a key differentiator. 3️⃣ Lower barriers for ecosystem innovation. Fintechs, PSPs and software platforms can integrate once and access multiple payment rails, accelerating innovation for merchants and enabling new commerce experiences without rebuilding core infrastructure. 4️⃣ Networks are evolving into platforms. Moves like this reinforce a broader trend: payment networks are no longer just processing transactions — they are becoming programmable infrastructure layers that others build on. For those of us working in payments, this shift is fascinating. The industry is moving from “card networks” to “payments platforms.” And when infrastructure becomes programmable, the real innovation happens at the edges — where fintechs, merchants, developers and partners build the next generation of commerce experiences. Exciting times ahead for the ecosystem! #payments #fintech #apis #digitalpayments #innovation https://lnkd.in/gXkpYQ2i

SARB just became a 50% Owner of BankservAfrica. South African Reserve Bank (SARB) has taken a major stake in BankservAfrica. And Bankserv has now rebranded as PayInc SA. But who are they? They're the core engine behind SA’s payment systems. Think of BankservAfrica as the national railway for digital payments – it handles everything from card transactions and EFTs to real-time platforms like PayShap SA. Now, with SARB acquiring them, SARB isn’t just the regulator, they'll also be the co-owner and modernizer of that railway. It's like the government is making sure the train goes to underserved towns (the unbanked), and the train keeps "running" smoothly. 🔁 But why is SARB stepping in? Interoperability: They want to ensure all payment systems – old and new – can work together seamlessly. Inclusion: They want to extend affordable digital payment access to underserved communities, "the unbanked". Innovation: They want to accelerate the shift from cash to digital, supporting initiatives like instant settlements and lower transaction costs. And this follows a trend seen in emerging markets like India (UPI) and Brazil (Pix), where central bank-led payment modernisation dramatically increased financial inclusion and reduced reliance on cash. But this also theoretically means faster, cheaper, and safer transactions for everyone – from street vendors accepting QR payments to businesses settling invoices in real time. SARB’s move signals that payments are now critical national infrastructure. And when central banks invests directly, change tends to happen faster. But will this actually increase financial inclusion in South Africa? Will this make a difference? #SARB #BankservAfrica #Payments #DigitalTransformation #FinancialInclusion #Fintech #SouthAfrica —— I'm Elly - a data analyst in banking. If you liked this, you'll like my free newsletter THE BANKING BRIEF: 5 Minute banking and fintech news.