Interoperability Is Infrastructure

Why the Next Phase of Africa's Mobile Money Revolution Depends on Connecting What Already Exists

Africa's mobile money ecosystem is, by most quantitative measures, the most successful financial technology deployment in the developing world. As of 2025, Sub-Saharan Africa accounts for roughly 709 million registered mobile money accounts — nearly half of the global total. Transaction volumes exceeded $2 trillion annually. The number of active mobile money agents surpassed 10 million, making the agent network the largest financial services distribution channel on the continent, eclipsing bank branches by a factor of roughly twenty to one. The mobile money industry's market valuation reached an estimated $951 million, with projections suggesting it would exceed $1.5 billion by 2030.

Yet this success masks a structural limitation that increasingly constrains the ecosystem's potential: the systems do not talk to each other. A customer of MTN Mobile Money in Ghana cannot seamlessly send money to a Vodacom M-Pesa user in Tanzania. An Orange Money wallet in Senegal cannot directly pay a merchant using Airtel Money in Kenya. Cross-network and cross-border transactions remain friction-laden, expensive, and in many corridors simply impossible. The mobile money revolution built remarkable vertical depth — penetrating communities that formal banking never reached — but it built almost no horizontal breadth. Each network is, in effect, a digital island.

Interoperability — the capacity for different payment systems to communicate, transact, and settle with each other — is the infrastructure that transforms these islands into an archipelago and, eventually, into a continent. It is not a feature enhancement or a nice-to-have. It is the single most consequential structural upgrade that Africa's digital financial ecosystem requires, and its absence is becoming the binding constraint on the next generation of financial innovation.

The Current State of Fragmentation

The scale of the fragmentation problem is difficult to overstate. Africa now has approximately 36 instant payment systems deployed across 31 countries. These systems were built at different times, by different entities, using different technical standards, and with different governance models. Some are operated by central banks. Others are run by industry consortia. A handful are managed by private switching companies. The technical architectures range from ISO 20022-compliant modern platforms to bespoke systems built on proprietary protocols that predate contemporary messaging standards.

The result is a patchwork that makes intra-African payments substantially more expensive and slower than they should be. Sending $200 from Lagos to Nairobi through formal channels costs, on average, between 8 and 12 percent of the transaction value. The same transaction within the SEPA zone in Europe costs effectively nothing. The remittance corridor between South Africa and its neighbouring countries — one of the most heavily trafficked in the world — carries average fees of approximately 9.4 percent, according to the World Bank's Remittance Prices Worldwide database. These costs are not primarily reflective of underlying transaction risk or operational expense. They are a tax on fragmentation — a surcharge that consumers pay because the systems through which their money moves were not designed to interoperate.

Domestically, the picture is somewhat better but still deeply uneven. Ghana stands out as the most successful domestic interoperability deployment on the continent. Following the launch of the Ghana Interbank Payment and Settlement Systems' mobile money interoperability platform in 2018, cross-network transactions grew by 87 percent year-on-year in the most recent reporting period. Tanzania's national switch enables cross-network transfers between major mobile money operators, though adoption has been slower than hoped. Kenya, despite being the birthplace of M-Pesa and home to the continent's most mature mobile money ecosystem, was comparatively late to implement full domestic interoperability, with PesaLink and subsequent integration efforts only achieving meaningful scale in recent years.

Why Interoperability Is Harder Than It Looks

The common assumption is that interoperability is primarily a technical challenge — a matter of building APIs and agreeing on message formats. This assumption is wrong. The technical components of interoperability, while non-trivial, are well understood and have been implemented successfully in numerous contexts worldwide. The real barriers are economic, political, and institutional.

The economic barrier is straightforward: dominant operators have limited incentive to enable interoperability because their market power derives partly from network effects that interoperability would dilute. When M-Pesa controls 70 percent of mobile money transactions in a market, every person who joins M-Pesa to transact with existing M-Pesa users reinforces the platform's dominance. Interoperability breaks this lock-in by allowing a customer on a smaller network to transact with M-Pesa users without switching. From the dominant operator's perspective, interoperability socialises the benefit of their network investment while privatising the cost of enabling connectivity. This is a rational objection, and it explains why voluntary interoperability agreements between operators have been rare and typically limited in scope.

The political barrier emerges from the regulatory complexity of mandating interoperability. Central banks and telecommunications regulators must coordinate — an institutional challenge in jurisdictions where these entities have overlapping mandates and sometimes competing priorities. The central bank cares about systemic risk and monetary policy transmission. The telecommunications regulator cares about competition and spectrum allocation. The finance ministry cares about tax collection and illicit financial flows. Each has legitimate interests in how interoperability is designed, and reconciling those interests requires sustained political attention that is often diverted by more immediate crises.

The institutional barrier is perhaps the most underappreciated. Interoperability requires not just technical connectivity but a shared governance framework for dispute resolution, fraud management, settlement timing, and liability allocation. When a transaction fails — the sender's account is debited but the recipient's account is not credited — who is responsible? How is the consumer made whole? What happens when the failure involves operators in different countries subject to different regulatory regimes? These questions require institutional infrastructure that is as complex and as important as the technical plumbing, and in most African markets, this institutional infrastructure does not yet exist.

The Pan-African Payment and Settlement System

The most ambitious attempt to address cross-border interoperability is the Pan-African Payment and Settlement System, known as PAPSS. Launched by the African Export-Import Bank in collaboration with the African Union and the AfCFTA Secretariat, PAPSS is designed to enable instant cross-border payments in local currencies across the continent. The system allows a buyer in Nigeria to pay a supplier in Kenya in naira, with the supplier receiving the equivalent in Kenyan shillings, without either party needing to acquire dollars as an intermediary currency.

The design is elegant and addresses a genuine structural inefficiency. An estimated $5 billion annually is lost to currency conversion costs in intra-African trade, largely because the vast majority of cross-border payments are routed through correspondent banking networks in New York, London, or Paris — adding cost, delay, and counterparty risk to every transaction. PAPSS eliminates this detour by settling directly between African central banks.

As of early 2026, PAPSS had onboarded central banks and commercial banks across multiple African countries, with live transaction volumes growing steadily. However, the system faces the same adoption challenge that confronts any payment network: value accrues exponentially with the number of participants, but early participants bear costs without proportional benefits until the network reaches critical mass. PAPSS has also faced questions about its settlement model, its capacity to handle the volume of transactions that full continental adoption would generate, and its relationship to existing bilateral settlement arrangements that some central banks are reluctant to abandon.

Lessons from Elsewhere

The experience of other regions offers instructive parallels. India's Unified Payments Interface, perhaps the world's most successful interoperability platform, processed over 13 billion transactions per month by late 2025, with a total value exceeding $250 billion monthly. UPI's success was driven by several factors that are partially but not fully replicable in Africa: strong central bank leadership from the Reserve Bank of India, a national digital identity infrastructure (Aadhaar) that provided a universal identifier, and a regulatory willingness to mandate participation by all licensed payment service providers.

Brazil's Pix system, launched in November 2020, achieved remarkable adoption speed, reaching over 150 million registered users — roughly 70 percent of the adult population — within three years. Pix's success was similarly enabled by central bank mandate: all financial institutions above a certain size were required to participate, removing the collective action problem that voluntary schemes face.

The Southeast Asian experience is perhaps most relevant to Africa's multi-country context. The ASEAN region has pursued bilateral interlinkages between national real-time payment systems — Singapore's PayNow with Thailand's PromptPay, for instance — rather than building a single regional platform. This approach is slower but potentially more sustainable, as it builds on existing national infrastructure rather than requiring countries to adopt an entirely new system.

The common thread across successful implementations is clear: interoperability does not emerge from market forces alone. It requires regulatory mandate, institutional commitment, and sustained political support. Left to their own devices, dominant platforms will delay, limit, or condition interoperability in ways that protect their market position. This is not a moral failure — it is a predictable outcome of rational economic behaviour. The role of regulation is to align private incentives with public interest, and in the case of payment interoperability, this alignment requires active intervention.

What Full Interoperability Would Unlock

The case for interoperability is not merely about reducing transaction costs, although the cost savings alone would be significant. Full interoperability across Africa's payment systems would unlock several transformative capabilities that the current fragmented architecture cannot support.

First, it would enable genuine e-commerce at continental scale. The African Continental Free Trade Area, which aims to create a single market of 1.4 billion people, cannot function effectively if the payment systems that underpin trade remain balkanised. A merchant in Kigali selling to customers in Lagos, Dar es Salaam, and Accra needs to accept payments from multiple networks in multiple currencies with minimal friction. Without interoperability, the AfCFTA's ambition of a seamless continental market remains aspirational.

Second, interoperability would dramatically reduce the cost of remittances, which remain a critical source of household income across the continent. Sub-Saharan Africa receives approximately $50 billion annually in remittances from its diaspora, and intra-African remittances — transfers between African countries — represent a growing but poorly served segment. Reducing remittance costs from the current average of 8 to 9 percent to the 3 percent target set by the Sustainable Development Goals would return billions of dollars annually to the households that can least afford to lose them.

Third, interoperability would create the data infrastructure necessary for more sophisticated financial products. When transactions are siloed within individual networks, the data generated is limited in scope and utility. When transactions flow across networks, the resulting data provides a richer picture of economic activity, creditworthiness, and financial behaviour — enabling better credit scoring, more accurate insurance pricing, and more effective targeting of financial products to underserved populations.

Fourth, and perhaps most importantly, interoperability would shift the competitive dynamics of the digital financial services market from network scale to service quality. In the current environment, the dominant operator wins because everyone needs to be on its network. In an interoperable environment, the best operator wins because customers can transact with anyone regardless of which network they use. This shift would benefit consumers, encourage innovation, and create opportunities for smaller, more nimble providers to compete on the basis of product quality rather than network size.

The Path From Here

Achieving full interoperability across Africa's payment systems is a generational project, not a quick fix. It requires coordinated action at the domestic level — where central banks must mandate and govern interoperability — and at the regional level, where institutions like PAPSS, the AfCFTA Secretariat, and the African Development Bank must provide the frameworks for cross-border connectivity.

The most productive near-term actions are those that lower the barriers to interoperability adoption. Open API standards, published and maintained by neutral bodies, would reduce the technical cost of integration. Regulatory sandboxes that allow new interoperability models to be tested before full-scale deployment would reduce the institutional risk. Donor and DFI funding for the shared infrastructure — switching platforms, settlement systems, fraud management tools — would reduce the financial burden on individual countries, particularly smaller economies where the business case for standalone investment is thin.

The mobile money revolution demonstrated that financial infrastructure does not need to follow the developed-world playbook. Africa leapfrogged branch-based banking entirely, building a distribution network that is orders of magnitude more extensive, more accessible, and more cost-effective than anything the traditional banking model could have produced. The next leapfrog — connecting those networks into a seamless, interoperable continental payment system — is harder, slower, and less glamorous. But it is the infrastructure upon which everything else depends. Interoperability is not an upgrade. It is the foundation.