Why Africa Needs Regulatory Interoperability Alongside Payment Interoperability

Connecting Payment Rails Is Only Half the Work of Building a Truly Pan-African Payments Market

Africa's payment ecosystem is becoming increasingly connected.

Instant payment systems are expanding. Mobile money networks are becoming more interoperable. Banks and fintech companies are opening new API connections. Regional payment initiatives are making it easier to move value between markets, while the growth of digital commerce is creating greater demand for efficient international payments.

These developments address one of the continent's biggest historical challenges: payment interoperability.

But connecting payment systems does not automatically create a unified payments market.

A Payment Service Provider may be technically capable of connecting to a payment rail in another country while still facing an entirely different licensing regime, compliance framework, foreign-exchange environment, data regime, and supervisory process.

The technology may be interoperable.

The regulation often is not.

For Africa to unlock the full potential of regional payments, the next stage of integration must therefore happen on two levels simultaneously: payment interoperability and regulatory interoperability.

Payment Interoperability Is Making Significant Progress

Payment interoperability describes the ability of different financial systems, institutions, networks, and payment methods to interact.

For consumers, the concept is simple.

A customer should be able to send money or make a payment without needing to understand the infrastructure operating behind the transaction.

For businesses, interoperability can mean connecting different banks, mobile money networks, PSPs, instant payment systems, and other payment methods.

This is particularly important in Africa because the continent has developed highly diverse domestic payment ecosystems.

Cards may be important in one market. Mobile money may dominate another. Bank transfers and instant account-to-account payments may be growing elsewhere.

Interoperability allows those systems to become more connected without requiring every market to use the same payment method.

That is an important foundation for Pan-African commerce.

But it is not sufficient.

A Connected Rail Does Not Automatically Create Market Access

Imagine that payment systems in two countries become technically interoperable.

Money can move between them efficiently.

From a technology perspective, the connection exists.

But can any regulated PSP in Country A immediately provide services in Country B?

Usually, the answer is more complicated.

The provider may still need to address:

• local licensing requirements
• corporate structure requirements
• minimum capital rules
• KYC and AML obligations
• reporting requirements
• data-protection requirements
• safeguarding rules
• foreign-exchange restrictions
• local settlement requirements

The payment rail may therefore cross the border more easily than the payment company using it.

This creates a fundamental gap between technical connectivity and regulatory connectivity.

What Is Regulatory Interoperability?

Regulatory interoperability does not mean creating one regulator or one set of financial laws for the entire African continent.

That would be neither realistic nor necessarily desirable.

Instead, regulatory interoperability means creating frameworks that allow different national regulatory systems to work together more efficiently.

This could include:

• greater alignment of regulatory definitions
• common minimum standards
• standardized licensing information
• mutual recognition of certain regulatory assessments
• coordinated supervisory practices
• better regulatory data sharing
• regional compliance frameworks
• regulatory passporting between participating jurisdictions

The objective is not to eliminate national regulation.

It is to reduce unnecessary duplication while preserving appropriate local oversight.

Why Africa's Regulatory Fragmentation Matters

Africa consists of more than 50 national markets.

Each has developed its own financial institutions, regulatory structures, currencies, economic priorities, and risk frameworks.

That diversity is understandable.

But it creates significant complexity for payment companies attempting to operate regionally.

A PSP expanding across several African countries may need to repeat similar regulatory work multiple times.

Governance structures need to be documented.

Compliance frameworks need to be reviewed.

Ownership information needs to be submitted.

Technical systems need to be assessed.

Capital requirements need to be met.

Local entities or partnerships may be required.

The larger the regional footprint, the greater the regulatory burden becomes.

For well-capitalized multinational payment companies, this complexity can be manageable.

For smaller fintech companies, it can become a major barrier to expansion.

Merchants Ultimately Pay the Price of Fragmentation

Regulatory fragmentation may initially appear to be a problem for PSPs and fintech companies.

But merchants experience its consequences too.

If payment providers cannot expand efficiently across markets, businesses may need to work with separate providers in different countries.

That can create:

• multiple integrations
• separate contracts
• fragmented reporting
• different settlement processes
• additional reconciliation
• inconsistent customer experiences
• higher operational overhead

A merchant may have one regional business strategy but several independent payment operations underneath it.

This is exactly the kind of complexity that payment interoperability is supposed to reduce.

Without regulatory interoperability, however, some of that fragmentation remains.

Payment Interoperability Without Regulatory Interoperability Has Limits

Consider a highway connecting several countries.

Building the road solves the infrastructure problem.

But if every border requires entirely different documentation, approvals, processes, and operating permissions, traffic still cannot move efficiently.

African payments face a similar challenge.

Payment interoperability builds the road.

Regulatory interoperability makes it easier for properly authorized participants to use it.

Both layers are necessary.

Otherwise, the continent risks developing increasingly sophisticated Pan-African payment rails while the institutions connecting businesses to those rails remain constrained by highly fragmented regulatory processes.

Regulatory Interoperability Is Not Deregulation

This distinction matters.

Calls for regulatory harmonization can sometimes be interpreted as arguments for weaker financial oversight.

That should not be the objective.

Payments require strong regulation.

Financial regulators need to protect consumers, prevent financial crime, preserve financial stability, supervise regulated institutions, and ensure payment systems operate securely.

Greater interoperability should strengthen these objectives rather than undermine them.

For example, standardized regulatory information could make it easier for regulators to understand the activities of PSPs operating across multiple markets.

Better information sharing could improve cross-border supervision.

Common minimum standards could strengthen expectations around cybersecurity, governance, safeguarding, and AML.

Regulatory cooperation can therefore produce both greater market efficiency and stronger oversight.

Common Standards Could Be the First Step

Full regulatory harmonization across Africa would be extremely difficult.

A more practical starting point is greater standardization.

Regulators could gradually align certain foundational requirements for payment providers.

For example, markets could develop more comparable standards around:

• ownership disclosure
• governance
• risk management
• cybersecurity
• AML controls
• safeguarding
• operational resilience
• regulatory reporting

The requirements would not need to be identical.

But greater consistency would make regulatory frameworks easier to compare and could reduce the amount of work that needs to be repeated during regional expansion.

Regulatory Passporting Could Be the Next Layer

Greater standardization could eventually support regulatory passporting.

Under a passporting model, a PSP already authorized in one participating jurisdiction could receive a streamlined pathway to operate in another.

The second regulator would not simply surrender its authority.

Instead, it could recognize specific elements of the regulatory assessment already completed elsewhere while retaining control over requirements that are genuinely market-specific.

The principle could be:

Recognize what is equivalent. Review what is local.

This could significantly reduce duplication without removing regulatory accountability.

For Pan-African payment companies, such a model could transform the economics of regional expansion.

Regulatory Data Needs to Become More Portable

There is also a technological dimension to regulatory interoperability.

PSPs repeatedly provide regulators with similar information.

Ownership structures.

Director information.

Financial statements.

Compliance policies.

Risk frameworks.

Cybersecurity controls.

Audit information.

Licensing history.

Much of this information could potentially become more standardized and portable between trusted regulatory authorities.

RegTech infrastructure could enable secure exchange of verified regulatory information, reducing repetitive submissions while improving supervisory visibility.

In this sense, Africa may eventually need interoperability not only between payment systems, but also between regulatory information systems.

Cross-Border Compliance Needs Greater Coordination

AML and financial-crime prevention provide another strong case for regulatory cooperation.

International payments naturally cross supervisory boundaries.

A transaction may involve a customer in one country, a merchant in another, a PSP elsewhere, and several financial institutions along the route.

Financial crime does not respect national borders.

Regulatory information, however, often remains highly fragmented.

Stronger mechanisms for lawful information sharing, common risk principles, and coordinated supervision could help regulators identify cross-border risks more effectively.

Again, interoperability does not necessarily weaken compliance.

Properly designed, it can strengthen it.

Foreign Exchange Remains Part of the Equation

Payment connectivity alone also cannot eliminate currency complexity.

African businesses operate across numerous currencies and different foreign-exchange regimes.

Even when a transaction can technically move between two payment systems, rules governing conversion, settlement, capital movement, and repatriation may affect how efficiently funds can ultimately reach the merchant.

This is another reason why Pan-African payments cannot be solved purely at the API level.

Payment interoperability must exist within broader financial and regulatory frameworks capable of supporting legitimate cross-border commerce.

AfCFTA Makes Regulatory Interoperability More Urgent

The African Continental Free Trade Area strengthens the economic case for greater regulatory coordination.

AfCFTA aims to increase intra-African trade and make it easier for businesses to operate regionally.

Digital commerce can accelerate that objective.

A business can reach customers in another country without opening physical stores there. Digital services can be delivered instantly. Marketplaces can connect buyers and sellers across borders.

But every commercial transaction eventually needs a financial layer.

If trade becomes more integrated while payment regulation remains highly fragmented, financial infrastructure can become a bottleneck.

Payment policy therefore needs to be considered part of the broader regional trade agenda.

Regional Progress May Come Before Continental Alignment

Regulatory interoperability does not need to begin with a single continent-wide framework.

Regional approaches may be more realistic.

Markets that already share economic, monetary, or regulatory relationships may be able to develop deeper forms of mutual recognition first.

These frameworks could provide practical environments for testing:

• standardized licensing requirements
• regulatory information sharing
• coordinated supervision
• mutual recognition
• passporting models

Successful regional approaches could gradually become more connected.

Africa's path toward regulatory interoperability is therefore likely to be evolutionary rather than immediate.

What This Means for PSPs

Until greater harmonization emerges, PSPs must continue operating within today's regulatory reality.

That makes regulatory readiness increasingly important.

Payment providers with strong compliance processes, transparent governance, adaptable technology, and clear operational structures will find it easier to navigate multiple jurisdictions.

Regulation should therefore not be viewed solely as an administrative requirement.

For PSPs with regional ambitions, regulatory capability is part of their ability to scale.

At the same time, PSPs can help merchants manage the practical consequences of fragmented markets by simplifying access to multiple payment methods and payment environments.

DalaPay: Simplifying Payments Across Diverse Markets

DalaPay is a Payment Service Provider (PSP) helping businesses manage domestic and international payments across African markets.

Africa's payment diversity creates significant opportunities for merchants, but it can also make expansion operationally complex.

Different markets can mean different payment methods, currencies, financial partners, settlement arrangements, and regulatory environments.

DalaPay helps businesses simplify the payment side of this complexity by providing access to multiple payment methods and multi-currency payment capabilities through a unified platform.

As African payment systems become increasingly interconnected, stronger regulatory interoperability could make regional payment ecosystems even more accessible to businesses and the PSPs serving them.

DalaPay is a portfolio company of Velex Investments.

Africa Needs Two Forms of Interoperability

The next generation of Pan-African payments requires two complementary layers.

Payment interoperability connects the systems that move money.

It enables banks, mobile money platforms, PSPs, instant payment networks, and other financial systems to transact more efficiently.

Regulatory interoperability connects the frameworks governing the institutions that use those systems.

It can reduce unnecessary duplication, improve regulatory cooperation, and create clearer pathways for compliant financial companies to operate across multiple markets.

One without the other leaves part of the problem unresolved.

The Next Challenge Is Institutional

African fintech has demonstrated extraordinary capacity for technological innovation.

The next phase requires institutional innovation alongside it.

Regulators, central banks, payment networks, financial institutions, and fintech companies need to consider not only how payment systems connect, but how regulatory frameworks can interact more effectively.

That may involve common standards.

It may involve better information sharing.

It may eventually involve regulatory passporting.

And it will certainly require greater cooperation between jurisdictions.

These developments will take longer than launching a new API or payment product.

But their impact could be significantly greater.

Conclusion

Africa is making important progress toward more interoperable payment systems.

The next challenge is ensuring that regulation evolves alongside them.

Connecting payment rails while leaving regulatory frameworks completely fragmented limits how effectively PSPs, merchants, and fintech companies can take advantage of that connectivity.

The objective should not be identical regulation across every African market.

It should be regulatory interoperability: national frameworks capable of working together without sacrificing local oversight, consumer protection, financial stability, or compliance standards.

Payment interoperability can make it easier for money to cross African borders.

Regulatory interoperability can make it easier for trusted payment companies to serve the businesses and customers on both sides of those borders.

Africa needs both to build a truly connected Pan-African payments market.

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