Imagine this: after two years of remarkable success in one market, you decide it’s time to venture into new African markets. However, one of the most significant challenges you’ll face is cross-border payments. There are too many regulatory hurdles and exorbitant fees keep severely eating into your margins, making expansion more difficult.

This scenario reflects the reality for many B2B companies and services struggling to scale through traditional banking solutions. A recent report by fintech company Duplo, released in August, highlights the continued reliance on conventional banking methods—such as cash and bank transfers—for cross-border B2B payments, particularly in West and East Africa. This dominance persists despite the many drawbacks of these methods.

---

Some of these drawbacks include:

• High Costs: Traditional banking methods, especially for international transactions, come with significant fees that hinder the growth of B2B businesses. These fees include transfer fees, exchange rate markups, and third-party charges, often reaching as high as 25%. For instance, in cross-border payments, the combination of SWIFT transfer costs, currency conversion markups, and other hidden fees can make traditional banking options significantly more expensive compared to specialized fintech alternatives like Startbutton. This can be particularly limiting for businesses looking to expand internationally, as high transaction costs reduce their profitability and competitive edge​.

• Slow Transaction Times: Bank transfers can take anywhere from 1 to 10 business days to process, causing delays in payments and cash flow issues. In a fast-paced B2B environment, such delays can translate to missed opportunities, cashflow disruptions and dissatisfied partners.
  This delay is often caused by the intricate steps involved in clearing and settling payments. Transactions are processed in batches, leading to delays when they occur near weekends or holidays, and the process may be further slowed by fraud checks and bank cut-off times.

• Regulatory Challenges: Regulatory challenges are a significant barrier to smooth cross-border payments, as countries have varying regulations on issues like anti-money laundering (AML), data sharing, and licensing requirements. For traditional banks, navigating these complex regulations can lead to delays, compliance risks, and legal complications, which slow down payments and increase costs. This regulatory fragmentation complicates compliance efforts and slows down expansion time.

Did You Know?
Startbutton as a Merchant of Record provides a streamlined solution to these regulatory challenges by handling compliance across multiple markets, allowing businesses to expand faster and more efficiently. This can save your business time and prevent costly delays due to regulatory issues. Click here to learn more.

• Unstable FX Rates: Fluctuating foreign exchange rates add another layer of complexity to cross-border payments. B2Bs can face significant losses if exchange rates shift during transaction processing. Traditional banks fail to provide lock-in mechanisms, leaving businesses exposed to unfavourable rates. This volatility can impact pricing, profit margins, and financial planning, making it harder for businesses to manage cash flows effectively across borders.

Are MORs the Alternative To Traditional Banking?

Merchants of Record (MoRs) like Startbutton offer a more comprehensive and robust solution to the challenges B2Bs undergo with traditional institutions. Here are some benefits to using such Fintech alternatives over traditional banks 

• APIs enable real-time FX rates
  As cross-border and multi-currency transactions continue to rise, treasury departments are under pressure to adopt digital tools that enhance their currency management workflows without causing disruption. This is where APIs (Application Programming Interfaces) come in.

Did You Know? Startbutton simplifies cross-border payments using a single API integration to handle all your payment needs across multiple markets.

APIs seamlessly integrate into existing treasury infrastructures, granting treasurers real-time access to foreign exchange (FX) rates. This capability enables better management of currency exposure, reduces risk across global accounts, and accelerates reconciliation.

By using APIs, you can also lock in FX rates for specific periods, giving you the flexibility to price goods in the client’s preferred currency while still managing funds efficiently on the backend. Additionally, APIs provide enhanced transparency for both senders and beneficiaries, allowing visibility into FX rates and the real-time status of payments. This transparency leads to more predictable cash movements and better cash management.

• Cost-Effective Solutions: Startbutton offers low-cost payment alternatives that significantly reduce the financial burden on B2B businesses. By leveraging technology to streamline processes, Startbutton minimizes transaction fees, making cross-border trade more accessible for SMEs.
  
• Fast Transactions: With a focus on efficiency, Startbutton ensures that transactions and collections are processed quickly, often within days. This rapid turnaround allows businesses to maintain smooth operations and seize opportunities without unnecessary delays.

• Navigating Regulations: Fintech alternatives like Startbutton, who offer compliance services, empower businesses to conduct smoother transactions and mitigate legal risks, allowing them to focus on growth and innovation. With in-depth regulatory knowledge that simplifies processes, and reduces administrative burdens, Startbutton helps B2B businesses avoid costly penalties and ensure they can operate confidently in new markets.
  With Startbutton as your compliance partner, you can save valuable time and prevent delays that often stem from regulatory issues. 

The landscape of cross-border B2B payments in Africa is ripe for transformation. While traditional banking methods continue to dominate, their inherent challenges present significant obstacles for businesses looking to expand. Startbutton exists to solve these issues and empower B2B companies thrive in the competitive global marketplace.

Ready to expand your B2B operations across Africa? Visit our website at www.startbutton.co to get started or send us an email at [email protected]. Let’s take your business to the next level together!