Cross-border payments Africa - Pan-African Payments and Settlement System

PAPSS - Transforming cross-border payments in Africa

In January 2022, the Pan-African Payments and Settlement System (short PAPSS) was formally launched. PAPSS originated from a joint initiative of the African Continental Free Trade Area (AfCFTA) Secretariat, the African Export-Import Bank and the African Union (AU), is headquartered in Cairo, Egypt and is administered by the African Central Banks. The official launch follows the successful operational pilot that took place in six West African countries.

The PAPSS is a finance platform that supports three core functions: Immediate Payment, Prefinancing and Net Settlement and is intended to facilitate payments in intra-African trade and thus support the implementation of the AfCFTA. It is an exchange for official currencies only, not for digital assets such as cryptocurrencies or central bank digital currencies.

The system is the latest milestone in the implementation of the AfCFTA ecosystem. A pan-African payment and settlement system is only one of the five key instruments supporting the AfCFTA. The other instruments include rules of origin, which determine what products and services can be traded duty-free; tariff concessions, starting with 90 per cent liberalisation; an online monitoring mechanism to remove non-tariff barriers; and the African Trade Observatory, a portal to help fill information and data gaps.

Goals of the PAPSS

The platform aims to minimise risk and contribute to financial inclusion in the regions. The system was developed to significantly ease payment transactions across Africa. It is expected to reduce costs and speed up the settlement and payment of trades. The system enables companies in Africa to pay for intra-African trade transactions in their local currency. Previously, this was a more challenging task, as there are currently about 42 different currencies being used in Africa.

The PAPSS was developed to contribute to achieving the goals of the new AfCFTA to remove trade barriers within the African continent as quickly and efficiently as possible. Many actors within Africa see the PAPSS as a turning point in intra-African trade. With good reason:

Before the implementation of the PAPSS, African businesses and their local banks used correspondent banks to settle payments between two African currencies in a third, external currency, usually dollars or euros. Often this was done using banks outside Africa. Another barrier of the former system was foreign exchange and liquidity requirements imposed on African central banks that had to be met.

The use of foreign currencies leads to critical time delays, as well as considerable costs for the conversion process. The introduction of the PAPSS is expected to save companies in Africa USD 5 billion in transaction costs annually. In the long run, PAPSS could also significantly reduce dependency on foreign currencies and the financial volatility associated with them. Cross-border transactions such as migrant remittances within Africa and exchanges between small businesses should become easier, faster and cheaper.

How the PAPSS works

The PAPSS works by linking the real-time gross settlement (RTGS) systems of the individual central banks. PAPSS balances all transactions between the individual currencies every day by offsetting them before midnight. The central banks then settle the remaining difference. The payment and settlement process starts again at net zero the next day.

PAPSS' real-time infrastructure provides a reliable and cost-effective solution for instant payments - when shopping, transferring money, paying salaries, trading shares and securities or making high-value business transactions.

Payment through the PAPSS involves the following steps:

  1. A company issues a payment instruction to its local bank or payment service provider;
  2. The bank sends the instructions to its central bank, which forwards them to PAPSS;
  3. The PAPSS validates the instruction
  4. Forwards it to the beneficiary's central bank and then to the local bank; and
  5. The local bank pays the transferred amount to the recipient in local currency.

PAPSS implementation

In the first phase of the PAPSS implementation, central banks are linking up with leading local banks. According to reports, the PAPSS is already connected to 25 of the continent's largest commercial banks, including Ecobank, Zenith Bank and Standard Bank.

In a second phase of PAPSS implementation, locally approved fintech companies will be able to access PAPSS so that they can process trade-related transactions for intra-African trade, including through mobile platforms.

In addition, PAPSS has signed a Memorandum of Understanding with BUNA, the cross-border multi-currency payment system owned by the Arab Monetary Fund (AMF). The memorandum aims to create interoperability between BUNA and PAPSS.

As of June 2022, the PAPSS network consists of 8 central banks, 28 commercial banks and six switches and is expected to be expanded to all five regions of Africa by the end of 2023. All central banks are expected to join by the end of 2024 and all commercial banks by the end of 2025.

Take advantage of the opportunities of the AfCFTA

The African Continental Free Trade Area, the largest free trade area since the formation of the World Trade Organisation (WTO), offers great opportunities for trade within Africa. Foreign companies planning to expand into Africa can make use of this if they comply with the AfCFTA regulations such as the Rules of Origin.

Are you as excited about this opportunity as we are? Send us an email to to find out more about the AfCFTA and how to take advantage of its potential. Our specialised team with 20 years’ experience in African markets offers an initial free consultation and will gladly assist you on every step of your African business ventures.