PAPSS, the African Payments System: What You Must Know
By Chuks Emele
The Pan-African Payments and Settlements System (PAPSS) went live last week. Immediately, it became possible for people to effect real-time, payment transactions across Africa without the need for correspondent banks.
PAPSS is a component of the the African Continental Free Trade Area (AfCTA) that is pushing for continental integration through trade. It enables intra-African payment transactions.
With the aid of information and computer technology, PAPSS links African banks with payment providers and financial market actors to effect secure and quick payments for goods and services.
Instant payments can be “made by originators to beneficiaries in their local currencies, no matter where they are in Africa,” the payment system said on its website about its capabilities.
How it works
The person making a payment will initiate an instruction in a local currency through their banks or a payment service. The instruction then goes to the PAPSS, where it undergoes verification and validation. Payment is then made in the beneficiary’s local currency in real time.
In preparation for the start of the payments and settlement system, the Afrexim Bank created the Mansa database, where intending participants were required to register their profiles. These were then verified and certified as fit to participate in the payments system.
This database was designed to derisk African transactions and overcome the impact of the elimination of correspondent banks, making it possible for businesses in Africa to pay each other without foreign intermediaries.