Digital currencies are expected to make cross-border money transfers cheaper and faster. However, the cost of converting these "digital dollars" into fiat currency remains higher than anticipated for users in Africa.
The promise of cheaper and faster cross-border money transfers through digital currencies is facing significant obstacles in Africa. According to recent research from payments company Borderless.xyz, while the median conversion cost across the continent is around 3%, some countries face significantly higher fees, with Botswana recording costs as high as 19.4% in January 2026.
The study, which XEM nearly 94,000 price checks across 66 currency corridors in Africa , revealed that while blockchain technology itself operates efficiently with virtually zero global money transfer costs, the real problem arises at the final stage. It is the conversion of digital currency into spendable cash that is where the costs accumulate.
Compared to Latin America, where users pay around 1.3%, or Asia, where costs drop to 0.07%, African users are clearly in a much less favorable position. In Congo, switching costs exceed 13%, while South Africa, with its many competing businesses, is expected to maintain costs around 1.5% by early 2026.
Lack of competition drives prices up.
The model is clear: more competition means lower prices. High fees emerge in markets where only one or two businesses process transactions. Without competition, there's no mechanism to prevent them from arbitrarily setting prices, creating the paradox that while mobile technologies and services in Africa are expected to generate $220 billion in economic value by 2024, this growth is not evenly distributed.
Researchers developed the TradFi Premium Index to compare cryptocurrency exchange rates with traditional bank conversion rates. Globally, the difference between the two rates is only about 0.05%, but in Africa this gap widens to 1.2%, equivalent to 119 basis points. African users are paying extra fees just to access the same cryptocurrency that is virtually free elsewhere.
At the World Economic Forum in Davos on January 24, economist Vera Songwe mentioned that digital currencies help cut costs, given that traditional money transfer services often charge 6% or more in fees. However, new data suggests that this only happens when businesses are truly competitive, and in some African countries, using digital currencies is actually more expensive than traditional money transfer services.
The solution lies not in adding more technology, but in having more businesses willing to participate. Government regulation also plays a crucial Vai ; countries lacking a clear legal framework for digital currencies often fall into a state of stagnation. New businesses will not enter a market where the legal status is ambiguous, and without new businesses, prices continue to remain high.
Blockchain technology is working as promised, but until more providers enter markets like Botswana and Congo, and until governments establish clear regulations that encourage competition, many users in Africa will still have to pay significantly higher fees. The revolution in money transfers has arrived, but it hasn't yet reached everyone.
