Legacy systems are holding back Africa’s fintech growth, can blockchain unlock a new era for payments?

By: technext24|2025/05/06 21:30:01
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Nigeria has built one of Africa’s most dynamic digital payment ecosystems, but the very systems that powered this transformation are now showing signs of strain.Over the past two decades, bank transfers, mobile wallets, and point-of-sale (PoS) devices have become embedded in everyday life. The country’s real-time payment infrastructure, led by the NIBSS Instant Payments (NIP) system, has helped Nigeria outpace many emerging markets; earning global recognition as the continent’s undisputed leader in instant payments.Yet behind the scenes, the rails that underpin this system are under pressure. Downtime is common, transaction failures are rising, and fraud continues to grow. For financial institutions processing millions of transactions daily, the cracks are widening.The limitations of legacy infrastructure are no longer just a technical issue. They now represent a structural bottleneck in the future of financial inclusion, commerce, and innovation across Africa.Nigerian BanksThe cash crunch of 2023 served as a stress test for Nigeria’s payments ecosystem. As digital transactions surged in response to limited cash supply, the system buckled. According to NIBSS, PoS transaction volume jumped from 113 million in February to 178 million in March, a 30% increase in just one month. But that spike came at a cost: failed and unresolved transactions reportedly hit 40%.For consumers, this meant longer waits, missed payments, and rising frustration. For businesses, it translated into real losses. And with 90% of payments in Nigeria still cash-based, the volume on digital rails is only set to increase, raising questions about the system’s capacity to scale.A more resilient alternative for paymentsBlockchain, once associated mainly with cryptocurrencies, is emerging as a viable infrastructure play for financial systems seeking speed, transparency, and resilience. Unlike traditional payment networks that rely on central intermediaries, blockchain-based systems allow institutions to process transactions directly, securely, and in real time.The benefits are both technical and operational: faster settlements, lower costs, tamper-proof records, and a shared ledger that gives all participants visibility into transaction data. In fraud-prone environments, this level of transparency could be a game-changer, allowing issues to be flagged and resolved instantly.Critically, blockchain doesn’t just replicate existing systems. It rewires them.Image credit: Fintechnews AfricaOne company taking this vision from theory to reality is Zone — Africa’s first regulated blockchain network for payments. Rather than routing transactions through central switches, Zone enables banks and fintechs to connect directly, exchanging value on a decentralised ledger.This shift eliminates common failure points: no intermediaries means fewer delays, and the shared infrastructure reduces errors and chargeback fraud — a growing concern in Nigeria’s digital economy.Zone’s architecture also aligns with regulatory requirements. By partnering with NIBSS — Nigeria’s central switch and payment aggregator — the company allows real-time regulatory oversight while still preserving the decentralisation and efficiency of blockchain.That’s not just innovation. Its alignment: compliance embedded into the network itself.Already, major financial institutions including Zenith Bank, First Bank, FairMoney, and PalmPay have joined the Zone network. Their bet? That a decentralised system offers the performance and security needed to keep up with rising volumes — and rising expectations.But the stakes are high. Scaling blockchain at a national level isn’t trivial. Questions remain about how these systems will perform under the full weight of Nigeria’s transaction volumes, and whether other institutions will move quickly enough to adopt new rails before legacy systems buckle further.Still, early signals are promising. By reconciling innovation with regulatory oversight, Zone offers a blueprint for how blockchain can modernise not just Nigeria’s infrastructure, but potentially serve as a model for other emerging markets grappling with similar limitations.A crossroads for African financeNigeria’s payment system stands at a crossroads. The old rails delivered unprecedented progress — but the future demands more. As digital volumes rise, service outages and fraud cannot be treated as routine.Blockchain, once viewed as a speculative frontier, is now showing its utility in the most practical way possible: making payments work better, faster, and safer. If adoption continues — and if performance holds — Nigeria could become the first country in Africa to prove that a blockchain-based financial system isn’t just possible, but preferable.And in doing so, it may just light the path for the rest of the continent.See also: Nigerian Box Office records ₦1.29bn revenue in April 2025 driven by ‘Sinners’ and ‘Ori: The Rebirth’

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