The Pan-African Payments & Settlement System (PAPSS) – Challenges, milestones, and the current state of affairs

Thursday 7 July 2022 08:52 CET | Editor: Andra Constantinovici | Interview

Mike Ogbalu III, Chief Executive Officer of PAPSS, answers all the ardent questions on the payments settlement system, from how the initiative started to what its future brings in an all-encompassing interview


Can you offer a bit of context of how PAPSS came to be and how it works?

At a time when cross–border trading is high on the Africa’s agenda, a single continental market makes it necessary for homegrown payment gateway to facilitate trade and investment. PAPSS was adopted in July 2019 in Niamey, Niger by the African Union Heads of State as the payment and settlement system to support the implementation of the African Continental Free Trade Area (AfCFTA). It is a Financial Market Infrastructure that has been developed and initiated through a collaborative effort of the AfCFTA Secretariat, Afreximbank and the African Union Commission. PAPSS is expected to create new financial flows and successfully facilitate trade and other economic activities among African countries.

How instant payments are settled on the pan african payments settlement system

How instant payments work within the Pan-African Instant Payments Settlement System (source: PAPSS)

At its core is an instant payment system built to the highest global standards, then coupled to the systems of central banks. This forms the settlement layer of PAPSS. This is then coupled to the core systems of commercial banks who will be direct participants on the PAPSS network. On top of this, we layer on other banks, fintechs and payment service providers as indirect participants. All these components together will create an innovation layer that will propel innovative solutions with the capacity to scale across the continent. Altogether, it is designed to ensure instant payments for goods and services between African jurisdictions, payments are initiated and settled in the local currencies of initiators and beneficiaries effectively eliminating the need for third (hard) currencies to consummate trades within our region.


What are the most important hurdles the instant payments system means to overrun through its proliferation? [especially considering achieving regulatory compliance for cross-border transactions to settle a payment in 120 seconds)

As a new payment system, the key hurdles it faces are:

Acceptance and adoption – It’s always a challenge to move people from the ‘status quo’. It will take an appreciation of the value that PAPSS is bringing in terms of speed, low cost and guarantee of receipt of funds by the commercial banks and their being able to translate this to their customers doing cross border transactions. PAPSS is equipping its participants (today, commercial banks and in the future, fintechs) with the ability to articulate these benefits in a way that empowers their customers.

Adapting to new standards – PAPSS uses the latest standards in payments, ISO 20O22. While similar to the current standards, it will still require an adjustment to use these standards while the world migrates later this year. PAPSS is actively supporting its participants in this transition.

PAPSS saw its commercial launch in January 2022. Can you give us an update on its current milestones and accomplishments in this first stage?

During the PAPSS commercial launch in Accra, we announced that the pilot phase with WAMZ (West African Monetary Zone) central banks has been completed and all six Central Banks have tested and gone through their trial operations. All the Central Banks became live on the system and have been sending through live transactions across the WAMZ region. Subsequently, we have signed up twelve of the largest commercial banks and four payment switches.

In the last few months, two more central banks have joined the PAPSS network thereby extending the reach to the southern and eastern African regions. Moreover, 19 commercial banks have also signed up the membership agreement which brings us to a total of 31 commercial banks. In parallel, we signed an MoU with BUNA, the cross-border and multi-currency payment system owned by the Arab Monetary Fund (AMF). This collaboration lays the foundation for the interoperability between PAPSS and BUNA payment systems, their participants will be able to make fast, secure and affordable transactions in their local currencies between the African continent and the Arab region.

There have been numerous debates on the positive impact of PAPSS on cross-border trade and reducing the cost, duration and time variability of cross-border payments across Africa. What are some implications for merchants and payment service providers as PAPSS develops across the length of the African continent?

Today, a lot of progress has been made towards low value person to person cross border payments. However, it is still not easy to make a person to business (merchant) payment in various jurisdictions. Moreover, person to person payments have restrictions in terms of transaction limits which can in turn hamper payments to businesses. With PAPSS, payments can be enabled through person to person, person to business and even through an ecommerce gateway, thereby given them many options but also access to new markets through expansion across the continent.

As Afreximbank described the system, it is meant to be a comprehensive legal, regulatory and operational framework comprising standardised rules, formats and governance arrangements, harmonised Know-Your-Customer and Anti-Money Laundering procedures, payment confirmation and settlement finality. What are the most stringent KYC/AML pain points that PAPSS hopes to surpass and what progress has been made so far?

A key priority is being in compliance with international best practice and global Anti-Money Laundering (AML) laws. The main pain point is inherent to the nature of our business as we need to work with different jurisdictions with different levels of exposure when it comes to AML/KYC. PAPSS works therefore closely with regulators to ensure this. For instance, our highest regulatory organ, the PAPSS Governing Council (PGC) has representation from all Central Bank Governors of participating countries and an Oversight Committee where their Directors of Payments sit. It is a requirement for all participants to comply with their local regulatory KYC and AML requirements. 

In addition, for KYC, PAPSS works with MANSA, a repository platform which provides a single source of primary data required for the conduct of customer due diligence on African entities; Financial Institutions, Corporates and SMEs championed by Afreximbank. To add to that, PAPSS has implemented a robust Sanction Screening platform that assesses transactions against global sanctions lists. In addition, an AML and fraud monitoring solution is under implementation to complement sanction screening processes and enhance AML and fraud management capabilities.

Can you share some final thoughts, mainly regarding how you think PAPSS performed so far and what are still the steps that the team behind it wishes to take to fulfil the system’s potential and goals? What’s next for PAPSS and what are the main priorities looking forward?

There is significant excitement about the African Continental Free Trade Agreement and the important role that PAPSS is playing to facilitate intra-Africa payments. Since inception, PAPSS has made meaningful gains towards this which include:
  1. Full integration of the West African Monetary Zone (Nigeria, Ghana, Liberia, Sierra Leone, the Gambia and Guinea) Central Banks

  2. Signing up 2 additional Central Banks from Eastern and Southern Africa respectively

  3. Signing up key commercial banks across the West African Monetary Zone and switches covering West, Central and East Africa

  4. Strategic partnerships that broaden our reach such as COMESA Regional Payment and Settlement System (REPSS) and The Buna platform, the first Arab regional payment system that allows the use of Arab currencies as settlement currencies alongside other international currencies. This is addition to partnering with AfricaNenda which whom we work with to build in-country capability for instant payments, preparing countries to be able to connect to PAPSS for cross border payments.

PAPSS has therefore been off to a great start, but we believe that we still have a lot of ground to cover to reach all corners of Africa. In the coming months, PAPSS will focus on deepening its West African presence while progressing moving to the other regions of Africa as part of broadening its reach. 

We expect to be in the 5 regions of Africa before the end of 2023, all Central banks signed up by end of 2024 and all commercial banks by end of 2025.

About Mike Ogbalu III

Mike Ogbalu III managed the E-Business Group of Afribank (now Polaris Bank) and represented Afribank on the boards of Valucard Nigeria (now UPSL) and ATMC. Mike was recognised with the award of Card Personality of Year 2012 for his work at Ecobank. Mike joined Interswitch Group initially as Divisional CEO – Interswitch Financial Inclusion Services where he was responsible for driving a mandate to create the largest agent network and thereby becoming a prime facilitator of financial inclusion in Nigeria. 

Today, as CEO of PAPSS, he is overseeing the building of a continent-wide payment infrastructure that will help to accelerate trade on the continent. He is currently a board member of the CBN mobile payments scheme board, an advisory board member of the Bridge International Academies and a Grand Patron of IAMCP-WIT Nigeria (International Association of Microsoft Channel Partners – Women In Technology).


The Pan-African Payment and Settlement System – PAPSS is a centralised Financial Market Infrastructure that enables the efficient flow of money securely across African borders, minimising risk and contributing to financial integration across the regions. PAPSS works in collaboration with Africa’s central banks to provide a payment and settlement service to which commercial banks and licensed payment service providers across the region can connect as ‘Participants’. PAPSS is a key instrument for the implementation of the African Continental Free Trade Agreement (AfCFTA). 

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Keywords: instant payments, payment processing, instant settlement, cross-border payments
Categories: Payments & Commerce
Countries: Africa
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