PAPSS explained: a local-currency payment still needs settlement

Original Afrikons explanatory text based on PAPSS process documentation. Afrikons summary; external journalists retain their original affiliations.

The Pan-African Payment and Settlement System describes three connected processes: instant payment, pre-funding and net settlement. Its customer-facing aim is to let a sender pay in one local currency while a recipient receives another.

A payment instruction travels from the sender’s bank or payment provider through PAPSS to the recipient’s provider. The system validates the instruction before the recipient’s institution credits the account. This customer payment is distinct from settlement between participating institutions.

Pre-funding makes liquidity available before those account movements are completed. Direct participants connect with central-bank settlement systems; indirect participants rely on a sponsoring direct participant. PAPSS then calculates net positions for settlement, including a hard-currency settlement step through Afreximbank.

Local-currency payment therefore does not mean that liquidity, currency conversion or institutional obligations disappear. The practical questions for a particular transfer remain whether its providers participate and which service terms apply. This explains the published design; it does not certify any bank’s service.