Cross-border payments are still a big challenge as African countries deepen their economic integration under the African Continental Free Trade Area (AfCFTA). Effective trade cannot take place if money cannot be moved between countries in record time.
If you have ever tried making payments between African countries, you know this process can be complicated, expensive and time-consuming. Transactions are often routed through international banks, requiring currency conversion into dollars or euros and can take several days to settle.
This is where the Pan-African Payment and Settlement System (PAPSS) comes in. This platform enables fast, secure and cost-effective payments across African countries in local currencies.
What is PAPSS?
PAPSS is the brainchild of Afreximbank.. Recognising that true intra-African trade can’t take off without a unified payment system, Afreximbank set out to build a solution that allows money to flow freely across the continent—without leaving Africa first.
The result is a platform that works closely with central banks, commercial banks, fintechs, and payment service providers across the region. These actors connect to PAPSS as Participants, forming a unified network capable of handling everything from low-value retail payments to large-scale business transactions.
How PAPSS Works
PAPSS operates on three core processes that are instant payment, pre-funding and net settlement.
Instant Payments
With PAPSS, the sender initiates a payment in their local currency and the recipient gets it in theirs. There is no need for intermediary currencies like USD or EUR. All compliance, legal and sanctions checks happen in real time and this allows most transactions to process within 120 seconds.
Pre-Funding
To maintain the speed and reliability of instant payments, participants must pre-fund their accounts. This ensures that PAPSS can confirm the availability of funds before executing transactions. For non-direct participants, this liquidity can be managed via a partner bank.
Net Settlement
At the end of each day (11:00 UTC), PAPSS settles all outstanding positions across participating central banks. Settlement is coordinated through existing Real-Time Gross Settlement (RTGS) systems and communicated using the ISO 20022 messaging standard.
Key Features of PAPSS
The PAPSS Instant Payment System (PIP) is the backbone of the platform and has some powerful features:
- Instant and irrevocable credit to customer accounts.
- Immediate notifications to both sender and recipient.
- Operates 24/7/365, enabling always-on transactions.
- Uses the ISO 20022 global messaging standard for data-rich interoperability.
- Built-in cybersecurity, fraud detection, and machine learning systems.
In addition to the core infrastructure, PAPSS also offers overlay services including:
- Request to Pay (R2P).
- Escrow services.
- Remittance and proxy addressing.
- Real-time sanctions screening.
Why Africa Needs PAPSS
PAPSS is a great development for more than just trade as it is useful for fintech, banking and e-commerce across Africa.
- It reduces the cost and friction associated with cross-border payments.
- It improves liquidity and usage of local currencies as it eliminates unnecessary conversions along the way.
- It can fuel innovation as it offers fintech startups an opportunity to build solutions on a pan-African payments infrastructure.
- It aligns with the AfCFTA’s aim to accelerate intra-African trade and economic growth.
PAPSS is currently live in some countries, including Kenya and is expanding across the continent. As more central banks, commercial banks and fintechs come on board, the system will grow to be a key piece of the puzzle in Africa’s financial infrastructure.
For startups, developers and payment innovators, PAPSS offers an opportunity to build new financial products and services perfect for the African market. These have the added benefit of real-time, cross-border payments.
Read More: KCB Group Joins Pan-African Payment System for Cross-Border Transactions in Africa
