African financial leaders have long known that intra‑continental trade faces a hidden tax. A trader in Nairobi sending goods to Lagos waits up to seven business days for settlement. A small business in Accra converting cedis to dollars to euros to naira loses 7–8% of the transaction value along the way. An estimated $5 billion leaks out of the continent annually through correspondent banking chains routed through Europe and the United States.
That hidden tax has now met its first serious competitor.
The problem
Cross‑border payments within Africa remain among the most expensive and slowest in the world. According to the World Bank’s 2023 Remittance Prices report, sending money across African borders costs an average of 7–8% of the total transaction value – above the global average of 6–7%. Settlement periods can extend from three to seven business days for a single payment.
The underlying cause is structural, not technical. More than 80% of intra‑African payments are routed through correspondent banks outside the continent, largely in foreign currencies. A payment from Kenya to Nigeria typically travels via New York or London, converting through dollars or euros along the way. This dependency costs the continent an estimated US$5.3 billion annually and exposes African economies to significant foreign exchange risks.
The Bank of Ghana’s Second Deputy Governor, Mrs Matilda Asante‑Asiedu, captured the paradox at the African Prosperity Dialogues 2026: “Africa hosts more than half of the world’s mobile money accounts. Yet much of this progress remains domestic rather than continental.”
The solution
On 26 February 2026, Kenya’s instant payment network, Pesalink, signed a partnership agreement with the Pan‑African Payment and Settlement System (PAPSS). Under the agreement, Pesalink joins the PAPSS platform as a Technical Connectivity Provider.
The integration enables instant, 24/7 cross‑border bank‑to‑bank and mobile money transfers settled in local currencies. More than 80 Kenyan banks, fintechs, SACCOs, and telcos on the Pesalink network are now connected to over 160 commercial banks and fintechs participating in PAPSS.
PAPSS, an initiative of the African Export‑Import Bank (Afreximbank) in collaboration with the African Union and the AfCFTA Secretariat, enables cross‑border payments between African countries in local currencies. The Pesalink integration marks the first time PAPSS has piloted a national switch for transaction termination in Kenya.
The strategic significance
This partnership is not merely a technical agreement. It is a new blueprint for African financial infrastructure.
First, it reduces complex correspondent banking requirements and reliance on foreign reserve currencies. Kenyan financial institutions can now offer cross‑border payment services to their customers through existing Pesalink rails, without building separate correspondent relationships.
Second, it supports the broader objective of intra‑African trade under the AfCFTA framework. PAPSS is forecast to save the continent more than $5 billion USD annually in payment transaction costs – money previously lost to currency conversion fees and offshore routing.
Third, it demonstrates a replicable model: connecting national instant payment systems to a continental settlement layer. As PAPSS CEO Mike Ogbalu III stated at the signing: “For PAPSS to deliver true impact, collaboration with national and private switches like Pesalink is essential. Pesalink is the first switch we’ve piloted for transaction termination in Kenya, and we are already seeing greater adoption by opening more channels for seamless, local‑currency cross‑border payments across Africa.”
Pesalink CEO Gituku Kirika added: “Kenyan banks will now be able to offer faster, cheaper cross‑border payments. They will be helping their customers grow more regional trading relationships and thrive in a more integrated digital economy.”
Scale and reach
As of 2025, the PAPSS network has expanded its footprint across four regions, connecting 19 countries, with over 150 commercial banks and 14 payment switches. This now includes a significant presence in North Africa, with countries like Morocco, Algeria, Egypt, and Tunisia on board, alongside growing corridors in East and Southern Africa.
Pesalink’s domestic scale is equally significant. The network processed over KSh 1.1 trillion in total transaction value in 2024, representing 31.6% year‑on‑year growth. Total transaction count grew 35% to 8.41 million. The network now connects 80 financial institutions and maintains a 98% transaction success rate with processing speeds reduced to just 2 seconds – a 75% improvement.
The opportunity for financial services leaders
For forward‑thinking banks, fintechs, and payment providers across Africa, the Pesalink–PAPSS link signals a fundamental shift. Fragmentation has long been treated as an immutable cost of doing business across 54 distinct regulatory and currency regimes. That assumption is no longer valid.
The integration creates immediate commercial opportunities:
- Kenyan banks can now offer faster, cheaper cross‑border payment products to SMEs and individuals without building new correspondent relationships.
- Fintechs on the PAPSS platform gain instant access to Kenya’s real‑time payment infrastructure, including its mobile money ecosystem.
- Businesses trading across borders benefit from reduced forex exposure, shorter settlement cycles, and lower transaction costs.
The road ahead
The Pesalink–PAPSS link is not the final destination. It is proof of concept.
PAPSS plans to onboard 500 million bank accounts from 30 African countries, building a continental payment network that operates in local currencies. Regional economic communities such as COMESA are launching similar digital retail payments platforms. Ghana has announced plans to pilot a continental digital trade corridor, testing mobile money interoperability and mutual recognition of digital identities for cross‑border KYC processes.
As Mrs Asante‑Asiedu noted: “Payment systems are strategic trade infrastructure, essential for monetary stability, financial integration, and long‑term economic transformation across our continent.”
The question for financial services leaders is no longer whether African payment systems will integrate. The question is which institutions will be positioned to capture value from that integration.
For forward‑thinking leaders across African banking, fintech, and payment infrastructure, the Pesalink–PAPSS link is more than a news story. It is a signal to build.
African financial institutions that align their cross‑border product strategies with the emerging continental payment layer – and measure adoption, settlement efficiency, and unit economics with rigour – will define the benchmark for regional integration in the years ahead.
SOURCES:
https://thepaypers.com/payments/news/pesalink-and-papss-link-networks-for-african-cross-border-payments
https://logistafrica.com/en/highlights/pesalink-and-pan-african-payment-and-settlement-system-papss-unlock-cross-border-payments-in-local-currencies-in-kenya/