PAPSS and the Instant Payment Boom: How Africa Is Rewiring Cross-Border Money

A Kenyan flower exporter paid by a buyer in Accra should not need a bank in New York. Yet for decades that is exactly how intra-African trade was settled: payments routed through US dollar or euro correspondent accounts, adding days of delay and, by Afreximbank estimates, several billion dollars a year in unnecessary costs. The Pan-African Payment and Settlement System — PAPSS — was built to end that detour.

Launched in January 2022 by Afreximbank together with the African Union and the AfCFTA secretariat, PAPSS lets commercial banks settle cross-border payments in local currencies in near real time. Four years on, the system is live across a growing list of markets, and it now sits alongside a second quiet revolution: national instant payment switches that have made domestic real-time transfers routine from Lagos to Dar es Salaam.

The Problem PAPSS Was Built to Solve

Intra-African trade has long been the world's most expensive to settle. A payment from Dakar to Nairobi could pass through two or three correspondent banks, each taking a spread and adding compliance checks. Afreximbank has estimated the annual cost of this external routing at around $5 billion. Beyond fees, the structure drained hard-currency liquidity from African markets and left exporters waiting days for money that was travelling between two African cities.

How PAPSS Actually Works

PAPSS operates as a real-time gross settlement layer connecting participating central banks. A sender pays in their own currency; the recipient's bank is credited in theirs; the system handles conversion and settlement centrally, with central banks guaranteeing finality. Commercial banks join through their central bank, and corporates reach the network through their existing bank relationships — there is no consumer app, and that is the point.

By 2026 the network counts central banks from West, East and Southern Africa among its participants, with commercial bank onboarding continuing in waves. Volumes remain modest relative to the continent's total flows, but each new currency pair removes a corridor that once required dollars.

The National Switches That Paved the Way

PAPSS did not arrive in a vacuum. Nigeria's NIBSS Instant Payments has moved money between bank accounts in seconds since 2011 and now processes enormous daily volumes. Ghana's GhIPSS built mobile money interoperability into national infrastructure in 2018. Kenya's PesaLink, launched by the banking industry in 2017, gave banks an answer to M-Pesa. Tanzania's TIPS connects banks and wallets alike, and Ethiopia's EthSwitch received an interoperability mandate that forced previously closed systems to talk to each other.

Fintechs Building on the Rails

A licensed layer of private companies connects businesses to this public infrastructure. Pan-African payment firms such as Onafriq — the network formerly known as MFS Africa — aggregate mobile money and bank connections across dozens of markets, while Flutterwave and its peers route merchant and remittance flows over the same switches. Their businesses only make sense because the underlying rails have become fast and, increasingly, interoperable.

• Instant settlement removes the working-capital drag on small exporters.
• Local-currency pairs reduce dependence on dollar liquidity.
• Interoperability gives wallets and banks a shared rail instead of bilateral deals.
• Standardised compliance checks cut rejection rates on cross-border payments.

Where the Bottlenecks Remain

Three frictions persist. Foreign-exchange liquidity is thin in many currency pairs, so spreads stay wide even when settlement is instant. Central bank approval processes differ market by market, slowing bank onboarding. And many of the continent's largest trade flows still price in dollars by contract habit, which no payment system can change on its own. PAPSS can settle a cedi-to-shilling payment in seconds, but only if both sides agree to invoice that way.

What 2026 Will Test

The AfCFTA's tariff schedules give the plumbing a reason to exist: as more goods qualify for preferential treatment, payment friction becomes the visible bottleneck. A cotton trader in Ouagadougou selling to a spinner in Mombasa cares little about the architecture of settlement — but cares deeply about being paid on Friday instead of next month.

The next phase is about scale, not pilots: more currency pairs, deeper FX liquidity arrangements between central banks, and tighter links between PAPSS and the national switches that already handle domestic instant payments. If those pieces hold, the vision of an African payment that never leaves African infrastructure stops being a slogan and becomes the default.