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How to Reduce Cross-Border Transaction Fees for Nigerian Businesses

2025-06-02 15:00

Introduction: Global payment costs for Nigerian businesses

For many Nigerian enterprises engaged in international trade, cross-border payments remain a silent cost driver. Every time a business sends or receives money across borders—whether for imports, exports, salaries, or services—hidden fees chip away at profit margins. These fees come in many forms: inflated foreign exchange (FX) rates, SWIFT network charges, intermediary bank deductions, and opaque pricing structures from financial providers.
The pressure is even greater as businesses contend with Naira volatility, regulatory constraints, and global competition. Traditional banking systems often lack transparency and flexibility, leaving Nigerian companies with limited control over their global payment costs.
But it doesn't have to be this way.
By understanding how international transaction fees work and exploring modern, fintech-powered alternatives, Nigerian businesses can significantly reduce costs and gain greater financial efficiency. This practical guide will walk you through key strategies—from choosing the right payment platforms to leveraging local and regional infrastructure—to help you keep more of your money when doing business across borders.

Understand the Real Cost of Cross-Border Payments

When Nigerian enterprises send or receive funds internationally, the visible transaction amount is only part of the story. Beneath the surface, a complex network of fees, conversions, and middlemen quietly increases the true cost of cross-border transactions.

FX Margins vs. Published Exchange Rates

One of the most overlooked costs in global payments is the foreign exchange (FX) margin. While the Central Bank of Nigeria (CBN) publishes an official exchange rate, banks and some providers often apply their own markups—sometimes 2–5% above the real market rate. For large enterprise payments, this margin can translate into millions of Naira lost annually.

SWIFT and Intermediary Bank Fees

Most cross-border payments made through traditional banks are processed over the SWIFT network, a messaging system connecting global financial institutions. However, this network often involves intermediary (or correspondent) banksthat each take a fee before the funds reach the final recipient. These deductions may not be known in advance, and businesses are frequently left guessing how much the recipient will actually receive.

Hidden Charges by Traditional Banks

Traditional financial institutions may layer on processing fees, compliance costs, and administrative charges without full disclosure. Often buried in fine print or bundled into FX rates, these fees can erode your payment value—especially when making frequent or high-volume transactions.

Differences Between B2B and P2P Costs

It’s also crucial to recognize that business-to-business (B2B) payments differ significantly from peer-to-peer (P2P) payments. While consumer remittance services might offer attractive rates, they’re not optimized for high-value, frequent business transactions. Enterprise payments require greater reliability, scalability, and compliance—factors that often come with their own cost structure.

Practical Tips

  • Request a full breakdown of fees from your current providers: Ask for itemized invoices that show FX rates used, intermediary fees, and processing charges. Transparency is your first step to cost control.
  • Use invoice auditing tools for international payments: Regularly review past international transactions to identify patterns of excessive fees, and use this data to negotiate better terms or switch providers.

Choose the Right Cross-Border Payment Platforms

After understanding where your money goes in cross-border transactions, the next critical step is choosing the right payment platform. The provider you use can dramatically impact your FX rates, fees, and the speed of settlements—especially for Nigerian enterprises making frequent or high-value international payments.

Traditional Banks vs. Fintechs

While traditional banks remain a default option for many Nigerian businesses, they are often slower, more expensive, and less transparent. Most banks rely on the SWIFT network, apply significant FX markups, and have limited control over intermediary fees. Their systems are also less optimized for fast, digital B2B payments.
By contrast, fintech platforms are purpose-built to simplify and reduce the cost of global payments. Many bypass SWIFT, offer real-time exchange rates, and provide better visibility on fees. For example, Kanzum—a modern cross-border payment solution—offers low FX spreads, faster transfers, and local receiving accounts in major currencies like USD, GBP, and EUR.

Multi-Currency Accounts: Cut Out the Conversions

A smart way to avoid unnecessary conversions is by using multi-currency business accounts. These allow you to hold, send, and receive funds in different currencies—without converting them back to Naira each time. For example, if your business regularly deals in pounds or dollars, keeping those currencies in dedicated accounts eliminates FX costs on every transaction.
Platforms like Kanzum offer multi-currency accounts with localized IBANs and bank account numbers, allowing Nigerian businesses to operate as if they were locally based in the UK, EU, or US.

Practical Tips

  • Use regulated fintechs with global reach like Kanzum: Ensure your provider is fully licensed and regulated in both Nigeria and major international jurisdictions. Platforms like Kanzum combine compliance with efficiency, offering tailored solutions for African businesses operating globally.
  • Choose platforms with local receiving accounts in USD, GBP, EUR: This allows your clients or partners abroad to pay you as if they were making a domestic transfer, saving you both time and money. It also improves cash flow by avoiding delays from international clearing systems.
By switching to cost-efficient, transparent, and flexible platforms, Nigerian enterprises can take control of their international payments—cutting costs while improving speed and reliability. In the next chapter, we’ll explore how to go beyond platforms and take advantage of Africa-focused payment infrastructure.

Leverage Local and Regional Payment Infrastructure

One of the most effective ways for Nigerian enterprises to reduce cross-border transaction fees is to avoid routing payments through traditional global corridors—especially those dependent on the US dollar. Instead, businesses can take advantage of emerging African payment infrastructure designed to facilitate faster, cheaper, and more direct settlements across the continent.

The Power of PAPSS (Pan-African Payment and Settlement System)

The Pan-African Payment and Settlement System (PAPSS) is a groundbreaking initiative by Afreximbank and the African Union to enable real-time, cross-border payments in local African currencies. Instead of converting Naira to USD, then back to another African currency like Cedi or Rand, PAPSS allows for direct currency exchanges between participating countries—cutting out multiple conversion layers and correspondent bank fees.
For Nigerian businesses trading with counterparts in other African countries, PAPSS offers:
  • Lower FX costs by avoiding the dollar
  • Faster settlement times (same-day in many cases)
  • Improved transparency and predictability
By integrating with PAPSS through participating banks or platforms, businesses can transact more efficiently across Africa.

Regional Settlement Networks: A Strategic Advantage

Beyond PAPSS, several regional initiatives and platforms are being developed to streamline payments within economic blocs like ECOWAS and the AfCFTA region. These networks aim to:
  • Reduce reliance on SWIFT and Western clearinghouses
  • Promote intra-African trade
  • Enable settlement in local or regional reserve currencies
Nigerian enterprises should actively explore:
  • Banking partners connected to regional clearing systems
  • Trade platforms supported by Afreximbank
  • Fintechs and treasury tools integrated with PAPSS or similar networks
This shift toward regional payment autonomy aligns with Nigeria’s growing role in intra-African trade and provides a sustainable way to reduce international payment costs.

Practical Tips

  • Request access to PAPSS via your current bank or fintech provider: If your payment partner isn’t connected yet, consider switching to one that is or express interest to push adoption.
  • Favor suppliers and partners within PAPSS-participating countries: This allows you to take full advantage of local currency corridors, bypassing USD-based conversions and SWIFT charges.

Conclusion: Reduce your international payment costs with Kanzum

For Nigerian enterprises engaged in global trade, cross-border transaction fees are more than just a nuisance - they're a hidden tax on growth. From inflated FX margins and SWIFT deductions to unnecessary currency conversions, these costs can quietly erode profits and slow down international expansion.
But as we've explored throughout this guide, these challenges are entirely solvable.
By first understanding the true cost structure of international payments, then adopting fintech-powered platforms, and finally leveraging regional infrastructure like PAPSS, Nigerian businesses can drastically reduce their cross-border expenses while improving the speed, visibility, and reliability of their transactions.
And when it comes to implementing all of these strategies in one place, Kanzum stands out as the most efficient and future-ready solution.
  • Low FX spreads
  • Local receiving accounts in USD, GBP, and EUR
  • Multi-currency accounts
  • Integration with regional systems like PAPSS
  • Built for Nigerian enterprises with global ambitions
Kanzum offers a modern, transparent, and cost-effective way to manage cross-border payments—backed by regulatory compliance and designed specifically for African businesses.
Ready to reduce your international payment costs?
Make the switch to Kanzum and start sending smarter today.