PAPSS Explained: How Africa's New Payment System Affects European Importers

For European importers sourcing from suppliers across the African continent, the mechanics of getting funds from a bank in Frankfurt or Milan to a counterparty in Lagos or Nairobi have long been a source of friction. Wire transfers route through correspondent banks, often pass through New York or London in US dollars, and arrive days later with fees stacked at each hop. A new settlement system is starting to change that picture, and it deserves attention from anyone running a procurement function with African exposure.

Key Point Summary

• What the Pan African Payment System (PAPSS) Actually Is
• Which African Countries Are Connected
• Why European Importers Should Care
• What papss Is Not
• The Broader Context for the African Continent
• What European Importers Should Do Now for Accelerating Africa's Trade

What the Pan African Payment System (PAPSS) Actually Is

The Pan-African Payment and Settlement System, or papss, is a financial market infrastructure developed by the African Export-Import Bank (Afreximbank) in collaboration with the African Union and the secretariat of the African Continental Free Trade Area. It launched commercially in January 2022 after a successful pilot in the West Africa Monetary Zone, and it has been expanding across the African continent ever since.

The premise is straightforward. Instead of routing payment transactions between two African countries through a third-currency correspondent network, papss enables near instant transfers in local currencies, with net settlement handled between central banks. A Kenyan buyer paying a Nigerian supplier can send shillings; the supplier receives naira. The conversion and settlement happen behind the scenes, with central banks settling net positions periodically rather than gross transactions in real time.

For context on why this matters: historically, more than 80% of intra african trade payments have been cleared offshore, mostly in US dollars or euros, with correspondent banks outside the continent capturing fees and float. Estimates from the African Union and Afreximbank suggest the continent loses around $5 billion a year in transaction costs tied to this arrangement. papss is designed to keep that value inside africa.

Which African Countries Are Connected

As of 2026, papss has onboarded central banks and commercial banks across multiple regions. Participation spans west africa (Nigeria, Ghana, Sierra Leone, Liberia, Gambia, Guinea), parts of eastern africa (Kenya, Djibouti, Rwanda), central africa (including engagement with the dr congo and Cameroon), and increasingly southern africa and north africa. Egypt's involvement through Afreximbank's Cairo headquarters and the participation of Zimbabwean and Zambian institutions reflect the breadth of the rollout. South sudan and several smaller economies have signalled intent to join.

The system now connects well over 150 commercial banks and financial institutions, with major cities like Lagos, Nairobi, Accra, Cairo, and Addis Ababa acting as operational hubs. The African Union has positioned papss as a flagship project for accelerating africa's trade integration, alongside the AfCFTA itself.

Why European Importers Should Care

If you import coffee from Ethiopia, cocoa from Côte d'Ivoire, cut flowers from Kenya, lithium from the dr congo, or textiles from Egypt, you are part of a supply chain where your African supplier's ability to receive funds quickly, in their own currency, and at low cost directly affects pricing, working capital, and reliability.

There are several practical consequences worth considering.

Supplier liquidity improves. When an Ethiopian exporter no longer waits five business days for a USD wire to clear and convert, their cash conversion cycle tightens. That tends to translate into better payment terms, fewer prefunding requests, and lower built-in financing premiums in the prices they quote you. For European buyers in Germany, France, Italy, and beyond who have absorbed those premiums for years, the gradual normalization is a real margin item.

Multi-country sourcing gets simpler for suppliers. Many African nations have suppliers who themselves import inputs from one african country to another, for example a Kenyan food processor sourcing packaging from South Africa or a Nigerian manufacturer pulling components from Ghana. When their upstream payments move through papss, their landed costs become more predictable, which feeds through to the prices you pay.

Currency risk gets repositioned. papss does not eliminate FX risk between the euro and African currencies, but it does shift where the conversion happens and who bears the spread. European importers who currently send EUR to a correspondent bank, which converts to USD, which then converts to the local currency, are paying for two conversions. As African banks deepen their direct EUR-to-local-currency capabilities on the back of papss infrastructure, that double conversion can be compressed into one cleaner transaction, minimizing risk and cost.

Settlement transparency. Because papss provides an audit trail across the African continent that does not depend on offshore correspondents, compliance teams in European banks and importers' treasury departments get cleaner data for sanctions screening and trade-based AML checks.

What PAPSS Is Not

It is worth being precise about the limits.

papss is not a retail payment system in the consumer sense. It is built primarily for commercial banks, payment service providers, and large corporate flows. Individual countries still operate their own domestic instant payment rails for everyday consumer transactions.

papss also does not directly process payments originating outside the continent. A euro payment from a European importer still enters the African banking system through normal correspondent or fintech channels. What papss changes is what happens after the funds land in the recipient region, and how onward intra-african flows are handled. The benefit to European importers is therefore indirect but real, transmitted through pricing, supplier resilience, and reduced friction in their counterparties' operations.

It is also not a substitute for the institutional and political work still needed across the continent. Several countries facing political instability, capital controls, or thin FX reserves cannot fully benefit from the infrastructure yet, regardless of how well the technology functions. The democratic republic of the Congo, parts of the Sahel, and economies grappling with acute food insecurity or post-conflict reconstruction will integrate at different speeds.

The Broader Context for the African Continent

papss sits inside a larger story about african leaders pursuing financial integration after decades during which most countries gained independence from colonial rule but inherited financial plumbing that routed value outward. The pattern, common across the Caribbean Community and parts of Latin America as well, was that self governance arrived faster than financial sovereignty.

The system reflects a continent of striking diversity. Africa lies across multiple climate zones, from the Mediterranean coast of north africa to the rainforests of central africa, from the east coast trading cultures shaped by centuries of Indian Ocean commerce to the agricultural belts of west africa. Its natural resources, agriculture, and increasingly its services sectors drive trade with Europe, Asia, and the rest of the world. The name africa itself, used as shorthand, masks 54 economies with different currencies, central bank frameworks, and trade priorities. A common settlement layer is therefore not a trivial achievement.

Recent years have seen real momentum. Economic growth across several regions, alongside rising intra african trade volumes under AfCFTA, has created the demand pull that makes papss commercially viable. At the same time, climate change pressures on agriculture, ongoing concerns about food insecurity, and the need for resilient supply chains have given african governments incentives to reduce dependency on offshore financial infrastructure they do not control.

For comparison, the United Nations and various development banks have been documenting for years how the efficient flow of cross border payments correlates with trade growth. Where transaction costs fall, trade rises. papss is, in essence, an applied bet on that correlation.

What European Importers Should Do Now for Accelerating Africa's Trade

A few practical steps make sense.

First, ask your African suppliers whether their bank is connected to papss, and whether they have the option to invoice and receive payments in their local currency through a papss-enabled channel. The answer will vary by country and by bank.

Second, talk to your own bank or payment provider about routing. Some European banks and specialized cross-border payment providers have started building direct corridors into African currencies that interface with papss on the receiving side, which can compress costs meaningfully versus traditional correspondent routing.

Third, revisit your hedging and payment terms. If suppliers no longer need to price in the cost and delay of legacy settlement, you have a basis for renegotiating. Not aggressively, but as part of a normal commercial review.

Fourth, think about country mix. As papss coverage deepens unevenly across the continent, suppliers in well-connected jurisdictions may become more competitive on terms than equivalent suppliers in countries still outside the system. This is a sourcing variable worth tracking.

Conclusion

PAPSS is not a story about exotic financial infrastructure in a faraway place. It is a story about how European importers' costs, supplier reliability, and access to African markets are quietly being rewired. The ability to send money securely and quickly across African borders, in local currencies, with lower friction, changes the economics of doing business with the continent.

For procurement, treasury, and supply chain teams in Europe, the right posture is informed engagement, but execution still requires the right partner on the ground. PAPSS handles intra-African settlement; it does not, on its own, solve the EUR-to-local-currency leg that every European importer still has to navigate. That is where FinchTrade fits in. As a VQF-regulated Swiss liquidity provider with deep coverage across African corridors, FinchTrade bridges European payment flows into the African banking system efficiently, combining institutional FX liquidity, stablecoin settlement rails, and direct relationships with local banking partners to deliver funds where PAPSS and domestic infrastructure can take over.

The system is still maturing, coverage is uneven, and the gains will accrue gradually. But the direction of travel is clear, and the importers who adapt earliest, by pairing an understanding of the new African payment plumbing with a settlement partner like FinchTrade that can deliver value into it reliably, will be best positioned to benefit.

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