When a Lagos business owner emails a supplier in Accra and hits send, she expects the usual headaches of chasing dollars, waiting days for a correspondent bank to clear the transfer, and worrying the final amount will be eaten by exchange costs.
That friction is exactly what the Pan-African Payment and Settlement System (PAPSS) was built to zap. It promises a world where that same payment moves in local currency, settles fast, and leaves both sides with less FX risk. The idea is simple. The reality, three years since PAPSS went live, is less so.
PAPSS was unveiled as the plumbing for the African Continental Free Trade Area. It lets banks and payment providers route cross-border transfers without detouring through the dollar and correspondent banking rails. Instead of a naira payment being converted to dollars and back to cedi, PAPSS nets transactions and settles across central banks, keeping the money in local currencies and shortening settlement windows.
In theory, that reduces cost, speeds up cash flow, and keeps value inside the continent, especially critical when intra-African trade still accounts for only about 15 percent of total African trade.
But theory has outrun practice. The system is live, and banks and regulators in pockets of the continent are using it. Yet adoption remains patchy. “PAPSS removes the need to route cross-border payments through USD,” Akinlabi Adegoke, Chief Digital Officer at Lotus Bank, told WT.
He said the main benefits for SMEs that have used PAPSS through his bank are lower costs, faster settlement, and less pressure to source foreign exchange. But he was blunt about limits: not all banks are fully integrated, some central banks are still ironing out settlement rules, liquidity arrangements are still maturing, and many businesses simply do not know the system exists.
That mix of technical, regulatory, and awareness problems explains the lukewarm rollout. A recent independent review of instant payment systems across Africa noted that regional systems such as PAPSS are growing but still lag national instant payment rails in reach and everyday use
Central banks are cautious for good reason. Cross-border settlement touches monetary policy, reserves, and liquidity. Regulators will not hand over fast-track settlement until they can predict how PAPSS will behave under stress.
There are early signs of traction
Afreximbank, which helps operate PAPSS, and other partners report a steady onboarding of commercial banks. Earlier this year, it was reported that PAPSS’s plan to expand into a currency marketplace to deepen liquidity and quoted officials saying the system is already linked to more than 150 commercial banks. That kind of connectivity could matter because a payments rail is only as useful as the parties on it.
Still, most of the continent’s payment volume runs over other rails. Mobile money networks and national instant payment systems continue to process the lion’s share of daily transactions. Big private operators such as MFS Africa have built broad networks connecting wallets and banks across many countries, and mobile money corridors between places like Kenya and Tanzania or Nigeria and Ghana are already business as usual for many traders. PAPSS is carving space into a crowded ecosystem.
What does PAPSS feel like for a user today? “A typical user doesn’t log into a ‘PAPSS app’, Adegoke explained. Most customers interact through their bank or payment provider. They initiate a routine transfer; the bank routes the payment through PAPSS, and the recipient receives local currency.
For SMEs that regularly buy regionally, the switch can be meaningful. “It helps with cash-flow planning,” he said, “and it makes pricing more predictable because the transaction stays in local currencies.”
Numbers tell a story
Some banks that pushed early have reported measurable volumes. In August, Fidelity Bank said it had processed over NGN 46 B through PAPSS since it adopted the system, and it highlighted settlement times that can be completed in under two minutes. Those pockets of scale show the model works when the plumbing and commercial incentives align. But such examples are still isolated exceptions, not yet the rule.
“PAPSS volumes are still modest compared to large players like MFS Africa or NIBSS because the network is still expanding. It is processing steady activity, but not yet at scale,” Adegoke told WT.
“The real comparison will look different once all major banks and mobile money operators across West, East, and Southern Africa are fully plugged in. We are not there yet.”
A fair reading is that PAPSS is promising and unfinished, with the biggest near-term constraint being network effect, according to Adegoke, adding that banks and mobile money operators must finish integration and agree on common liquidity arrangements.
It is also true that businesses need awareness and simple onboarding, and regulators must be confident that the system can absorb shocks.
The Lotus Bank exec is optimistic that resilience will grow with scale. He is aware, though, that cross-border rails are political as much as technical. “Possible risks include slowdowns if a country faces liquidity stress, or temporary limits if a regulator adjusts local rules,” he said.
Look ahead five years and the contours are clear. If PAPSS reaches a critical mass, ordinary traders could pay a supplier in another country without ever touching dollars. That would cut delays and hedge businesses against sudden FX squeezes for day-to-day commerce. Moreover, a functioning local-currency rail could help reduce dependence on foreign currency reserves for routine trade.
But PAPSS remains at best an emerging backbone for now. The question for traders, banks, and policymakers is how fast they want that backbone to become the continent’s default way of moving money.
