Executive summary
East Africa is recognised as the global home of mobile money. For more than a decade the region showed the world how digital payments can scale. In 2025 a new chapter is taking shape. The Pan African Payment and Settlement System known as PAPSS is expanding and is beginning to reshape how cross border trade within Africa can be settled in local currencies. This reduces reliance on offshore correspondent banking and lowers the cost of doing business across the continent.
During 2025 PAPSS grew to eighteen countries. It launched the African Currency Marketplace to enable direct matching of African currencies and it introduced PAPSSCARD which signals the emergence of a future retail layer. In East Africa KCB Group in Kenya and Bank of Kigali in Rwanda are already live and Tanzania confirmed its entry for year end. This corridor is now a practical test of how PAPSS will sit alongside mobile money regional payment schemes and national banking rails.
Snapshot of 2025 developments
In February KCB Group signed on to PAPSS. In March KCB in Kenya and Bank of Kigali in Rwanda went live. During March PAPSS previewed the African Currency Marketplace. In June PAPSSCARD was launched at Afreximbank meetings in Abuja. In July Morocco joined and the African Currency Marketplace was formally unveiled with Interstellar. In August Algeria became the eighteenth country to join. In September Tanzania confirmed its entry which places East Africa at the centre of adoption.
The PAPSS footprint
PAPSS now spans Ghana Nigeria Sierra Leone Liberia The Gambia Guinea Kenya Rwanda Djibouti Malawi Zambia Zimbabwe Egypt Senegal Cameroon Togo Morocco and Algeria. Not every market is live with every commercial bank but the breadth of participation shows clear political and regulatory momentum.
How PAPSS works
A business in Nairobi can pay a supplier in Kigali in Kenyan shillings and the supplier receives Rwandan francs. Transactions clear in under two minutes. Participant banks pre fund to guarantee settlement. Central banks net positions once each day and Afreximbank manages the hard currency leg across its accounts. The current focus is business to business flows although the introduction of PAPSSCARD suggests that consumer and merchant overlays may follow.
PAPSS and the AfCFTA agenda
The African Continental Free Trade Area aims to create a single African market for goods and services. Financial integration is essential for that vision. PAPSS provides the financial plumbing that allows payments to move quickly and in local currencies. It brings the cost of cross border settlement down from levels that can reach thirty percent of a transaction toward about one percent. It also keeps value within African financial systems which supports the broader goal of financial sovereignty across the continent.
The challenges PAPSS must overcome
Coexistence with regional and national payment schemes
East Africa already runs the East African Payments System through the regional central banks. Mobile money remains the dominant payment channel for daily use. PAPSS will need to integrate with these systems rather than compete. Without alignment businesses may face parallel rails and fragmented operations.
Fintech and PSP connectivity
Fintechs and payment service providers will decide whether to plug into PAPSS or remain with existing networks. This is a question of technology and economics. Mobile money operators have strong distribution and deep consumer trust. Our expectation is that many providers will adopt a hybrid model and will connect to PAPSS for cross border settlement while keeping current rails for reach and scale.
Foreign exchange and liquidity
Pre funding obligations can strain banks and corporates where currencies are volatile or markets are shallow. The African Currency Marketplace should reduce reliance on the dollar by matching local currency flows. Its success will depend on genuine liquidity and participation from market makers and banks in the main corridors.
Compliance and operational resilience
Instant settlement limits the scope for reversals. This places a greater burden on real time anti money laundering and know your customer controls. Institutions need monitoring and screening that work across borders and in seconds. As PAPSS scales it will also need to demonstrate strong cyber security and continuity planning in order to be trusted as a system of systemic importance.
Cavendrys view
In East Africa PAPSS will not replace mobile money or the East African Payments System in the near term. The more likely outcome is a layered model. PAPSS becomes the cross border settlement layer for larger value transactions while mobile money and card networks continue to dominate everyday payments. As adoption deepens fintechs and PSPs will connect to PAPSS where the commercial case is strongest and will retain existing rails for scale until network effects on PAPSS reach critical mass.
On foreign exchange we expect liquidity constraints to persist in Kenya and Tanzania. Corporates will need treasury strategies that combine pre funding with practical hedging arrangements. On compliance we expect regulators to raise the bar for real time monitoring and to seek clearer accountability for screening across the full chain of participants.
What this means for CEOs
PAPSS is an opportunity to expand across the region at lower cost and with faster certainty of settlement. The practical question is whether your banking partners and logistics partners are already connected and whether your treasury function is ready for pre funding across key corridors such as Kenya to Rwanda and Kenya to Tanzania.
What this means for General Counsel
PAPSS introduces issues of settlement finality the enforceability of netting arrangements across borders and the handling of disputes that touch multiple regulators. Instant settlement raises the bar for anti money laundering and know your customer obligations. It also requires close tracking of how PAPSS interacts with mobile money frameworks and the East African Payments System since corporates may face overlapping obligations that must be harmonised in contracts and policies.
Conclusion
PAPSS is now directly linked to the AfCFTA programme and is central to Africa’s ability to trade with itself at scale. It promises speed lower cost and a stronger degree of financial sovereignty. It also brings challenges in liquidity compliance and regulatory alignment that need active management. The organisations that prepare now will be first to turn this infrastructure shift into competitive advantage.
