Kenya’s instant payment network Pesalink has formally partnered with the Pan-African Payment and Settlement System (PAPSS) to enable real-time, around-the-clock cross-border payments settled in local currencies. The deal connects over 80 Kenyan financial institutions to more than 160 banks and fintechs across Africa, removing the need to route payments through correspondent banks outside the continent.
Key Points
- Pesalink becomes a Technical Connectivity Provider to PAPSS, linking its 80-plus network members — banks, SACCOs, fintechs and telcos — to over 160 institutions on the PAPSS platform across Africa.
- Payments will settle instantly, 24/7, in local currencies, cutting reliance on the US dollar and euro as clearing currencies and bypassing costly correspondent banking chains.
- Africa’s cross-border transfer fees average 7-8% of transaction value, above the global average of 6-7%, with settlements taking up to seven business days. This deal directly targets both problems.
- PAPSS was created by Afreximbank in collaboration with the African Union and the AfCFTA Secretariat. Kenya’s Pesalink is the first national payment switch PAPSS has piloted for transaction termination in the country.
- The partnership is expected to benefit SMEs and traders most, improving cash flow by cutting costs and shrinking settlement windows for intra-African commerce.
Context
PAPSS was designed to be the payments backbone of the African Continental Free Trade Area (AfCFTA), enabling money to move across borders as freely as goods and services are meant to. Until now, many intra-African payments have had to travel outside the continent through New York or London to clear in dollars, adding cost, time and foreign exchange risk. Pesalink, operated by Integrated Payment Services Limited (IPSL) and owned by the Kenya Bankers Association, has spent a decade building Kenya’s real-time domestic payments infrastructure. This deal extends that reach from Nairobi to over 240 institutions across the continent.
Why It Matters
Intra-African remittances totalled around $20 billion in 2023. Cheaper, faster settlement on those flows would represent real savings for millions of small traders, migrant workers and businesses. But beyond remittances, the bigger prize is trade finance. If African banks can settle cross-border commercial transactions in local currency without touching a correspondent bank, the cost of doing business across the continent falls significantly, exactly the kind of infrastructure AfCFTA needs to deliver on its promise.
Source: DevDiscourse
