People banking with I&M Bank Rwanda and Bank of Kigali will soon be able to own PAPSSCARD, the continent’s first Pan-African card scheme, allowing them to transact across borders using local currency. The new system allows a buyer in one African country to make a payment in his or her national currency and a seller in another country receives payment in his or her own national currency, effectively eliminating the need for third party currencies such as the US dollar to complete trade within the continent. ALSO READ: Pan-African payment system launched: How it works The joint venture between the African Export-Import Bank (Afreximbank), the Pan-African Payment and Settlement System (PAPSS), and Mercury Payment Services (MPS), launched end of June, is designed to enable cross-border retail payments across Africa without reliance on external payment systems. Currently, most African card payments are routed through global systems, leading to increased fees and loss of data control. The operationalisation of the card scheme will be championed by a partnership between the two local financial institutions, RSwitch –Rwanda’s national switch, and Nigeria’s Unified Payments. ALSO READ: Rwandan firm to extend pan-African payment system to region RSwitch will act as the switch of switches across the continent, meaning that it will serve as a central hub that routes electronic transactions between different payment networks and financial institutions. PAPSSCard will be hosted in Rwanda. Henry Obike, Chief Innovation Officer at I&M Bank, said that this initiative seeks to ensure that payments done within Africa are processed and settled within Africa, eliminating transactions through Visa or MasterCard that involve paying a lot of money. “So, every single ATM and the POS that is on Unified Payments (Nigeria’s switch) will now accept PAPSSCARD, which will be a local card denominated in Rwandan Francs.” He explained that it will be issued in three months as prepaid cards with clients requesting to load them from the bank’s branch, and over time, one will be able to load the card using other channels. “This initiative will cut transaction fees by 50 percent, and the cost of the cards to the banks will be cheaper compared to Visa or MasterCard, from the current five dollars to less than two dollars,” he added. Obike noted that the next phase will involve a partnership with the Discovery card scheme to allow acceptance of local currency payments outside the continent. “The whole ecosystem is to make sure that we take ownership of our current business and we make transactions cheaper to the banks, merchants, and individuals while maintaining high-level data security.” ALSO READ: How new Pan-African payment system will boost AfCFTA implementation Raoul Ndayambaje, Head of Payments at Bank of Kigali, said that the partnership with PAPPS has been a chance to raise intra-African trade ambition and make it a reality. “Our belief is that the future of intra-Africa trade lies in the ability to connect digitally, financially, and economically. What we have seen since launch is confirmation that this model works. For the first time, Rwandans can send and receive money across African borders in Rwandan Francs with speed and confidence.” “It removes friction, reduces cost, and allows payments across Africa in local currency,” he said, noting that the new product will be available on a new internet banking platform, which is currently in a pilot phase. During the launch of the Pan-African card scheme, John Bosco Sebabi, Acting CEO of PAPSSCARD, said that “it will reduce costs for public institutions, support innovation across the financial sector, and expand access to secure, modern payment tools for people and businesses across the continent.” The financial market infrastructure for instant cross-border payments, PAPSS, is set to boost intra-African trade and drive the implementation of the African Continental Free Trade Area (AfCFTA). Its full implementation is expected to save the continent more than US$5 billion in payment transaction costs each year.
