Cross-border payments within Africa have historically been more expensive and slower than they should be — often because a payment between two African countries is routed through a correspondent bank outside the continent, converted into a hard currency and back again, with fees and delays at every step. The Pan-African Payment and Settlement System (PAPSS) was built specifically to remove that detour.
How PAPSS Works
PAPSS enables instant, cross-border payments in local African currencies, settling directly between participating central banks rather than routing through an external hard-currency intermediary. For a business paying a supplier in a neighbouring country, this means a payment that once took days and multiple currency conversions can settle in minutes, in local currency, at a fraction of the cost.
Why This Matters for Trade
- Lower transaction costs — removing the correspondent banking detour cuts out layers of fees
- Faster settlement — near-instant clearing instead of multi-day processing
- Reduced foreign exchange exposure — settling directly in local currencies reduces the currency conversion risk businesses previously absorbed on every cross-border transaction
- Supports informal and small-scale trade formalisation — cheaper, faster formal payment rails reduce the incentive to route trade through informal or cash-based channels
Integration Is Not Automatic
For PAPSS to work for a given payment, both the sending and receiving country's payment infrastructure needs to be integrated with the system, and commercial banks need to actually offer PAPSS-enabled transfers to their customers. This is where much of the current work lies — national payment systems integrating with PAPSS, and financial institutions building the customer-facing products on top of it.
What We Have Seen in Pilot Integrations
In supporting a national payment infrastructure through a PAPSS integration pilot, the technical integration itself was often more straightforward than the surrounding regulatory and operational questions — settlement risk allocation, anti-money-laundering coordination across jurisdictions, and dispute resolution mechanisms all needed to be worked through before the pilot could move to full production.
The technology behind PAPSS is largely solved. The remaining work is regulatory alignment and institutional integration, country by country.
What This Means for Businesses
As PAPSS integration expands across more countries and banks, businesses trading regionally should expect — and should ask their banks about — faster, cheaper cross-border settlement options as an alternative to traditional correspondent banking routes.
Contact our Digital Trade Systems team to discuss PAPSS integration or other digital trade infrastructure.