Rwanda and Tanzania have planned to integrate their instant payment systems to pilot cross-border transactions in the East African Community (EAC), boosting trade and regional cooperation.
The monetary authorities of both countries are in talks to link their respective instant payment systems to allow citizens to send and receive funds in their local currencies in real time. The EAC Secretariat, which launched a plan to link multiple instant payment systems in the region, mentioned that the pilot is a key move in reducing the cost of cross-border transactions.
EAC’s plan to connect multiple countries
The preparations mark a shift in the EAC’s regional payment system integration mission, creating a single regional instant payment ecosystem that facilitates secure, affordable, and real-time transactions across borders. The eight-member bloc has seven such systems existing in four countries, including Kenya, Uganda, Tanzania, and Rwanda, while the remaining ones rely primarily on private mobile money or banking platforms for digital payments.
Connecting Rwanda’s RSwitch and Tanzania’s TIPS will allow citizens of both countries to send and get funds in real time via bank or mobile money accounts, addressing trade between countries. This will significantly improve trade and commerce, allowing businesses to settle invoices with partners and suppliers more easily, reducing operational friction and delivering new opportunities for growth and market expansion.
At the moment, East Africa’s cross-border payment corridors are one of the most expensive in the world due to the absence of a unified instant payment system. It takes 32% of the transaction amount to send USD 200 from one country to the next using the existing channels, while in other parts of the world, the cost is as low as 1%. Sending money from Tanzania to Rwanda is particularly expensive, with costs reaching 44% of the transaction amount.
By linking the two systems, these costs will fall, extending the reach of formal financial services by making cross-border transactions simpler, much like a domestic transfer. This will support a bigger segment of the population, including small-scale merchants and individual consumers.
To ensure the full rollout of the regional payment system, the EAC also works to harmonise regulations, strengthen underlying infrastructure, and create technical expertise on payments across all eight member states. Additionally, the bloc’s single currency plans have been delayed and are now expected to launch in 2033. At the same time, East African Payments and Settlement System (EAPS), which launched in 2013 to enable high-volume transactions between banks and corporations, recorded a 40% increase in transaction volumes, hitting USD 2 billion.
