4 Ways the KCB PAPSS Platform will Transform Cross-Border Payments

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The Pan-African Payment and Settlement System (PAPSS), developed by the African Export-Import Bank (Afreximbank), is set to revolutionize cross-border payments and trade transactions across Africa.

The PAPSS platform, which KCB Bank has now signed up to, brings efficiency, cost reduction, and enhanced financial integration to intra-African trade.

Here are four key ways the KCB PAPSS platform will transform cross-border payments.

Faster and More Efficient Transactions

One of the biggest advantages of PAPSS is its ability to significantly reduce the time required for cross-border payments. PAPSS, by providing a centralized financial market infrastructure, eliminates the need for intermediaries, allowing payments to be processed in real-time.

This advancement ensures that businesses and individuals can execute transactions swiftly.

Reduced Reliance on Foreign Currencies

The net settlement mechanism of PAPSS helps alleviate pressure on the demand for foreign currencies, a long-standing challenge in intra-African trade. The platform minimizes the dependency on the U.S. dollar or other foreign exchange mediums by enabling transactions in local currencies.

This will empower businesses to engage in regional trade without the complexities of currency conversion.

Cost Savings for Businesses and Financial Institutions

PAPSS reduces transaction costs by eliminating multiple intermediaries and lowering liquidity requirements for commercial banks. Previously, cross-border payments involved multiple correspondent banks, which increased fees and transaction delays. With PAPSS, KCB Bank Group customers will benefit from streamlined payment processes.

Strengthened Financial Oversight and Integration

The integration of PAPSS into KCB’s digital platforms aligns with the broader goal of enhancing financial transparency and regulatory oversight. Central Banks across Africa will have greater control over cross-border payment flows, improving security and stability within the financial system.

Furthermore, commercial banks will have the flexibility to set exchange rates, ensuring a more competitive and transparent market for businesses and consumers.

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As PAPSS continues to expand, with 15 Central Banks, over 150 commercial banks, and 14 financial switches already onboard, its adoption signals a new era of economic integration under the African Continental Free Trade Area (AfCFTA).

Speaking on this development, KCB Group CEO, Paul Russo, emphasized the bank’s commitment to driving economic transformation across Africa.

“We want to play a bigger role in catalyzing trade and payments in Africa and beyond, leveraging our digital capabilities and regional footprint. Our entry into PAPSS aligns perfectly with our strategy of supporting economic growth in Kenya and across Africa by facilitating seamless financial transactions.”

The Central Bank of Kenya and the Ministry of Investments, Trade & Industry have also expressed their support for PAPSS, highlighting its potential to address balance of payment challenges and boost intra-African trade, which currently stands at just 14%.