NIGERIA: Banks begin adoption of Pan-African Payment & Settlement System

DEPOSIT Money Banks (DMB) in Nigeria are embracing the Pan-African Payment and Settlement System, a cross-border financial market infrastructure enabling payment transactions across Africa.

The Pan-African Payment and Settlement system is designed to revolutionize cross-border payments, making them faster, cheaper, and more secure than ever before.

Speaking at a panel session on how Nigerian Commercial Banks are Integrating into The PAPSS Platform in Lagos recently, Kenneth Ugwuanyi, Head, Transaction Banking at UBA said the lender has been able to achieve interoperability, which means it can switch between banks, third parties and aggregators in real-time, which he described as monumental.

According to him, PAPSS has brought ease of use, output access, which is critical to payments and the network effect that needs to come into that place to make it useful.

“So if everybody has access to that infrastructure, everybody can go and make that payment significant. From a technological point of view, what is very important is that we have a continental framework, agreed by all the countries in Africa, for example. So all those issues around regulation. Protectionism by countries, for example, or the rubles that they put into payments have been typically removed for us.

“As Banks, what we need to do is to build strong use cases,” Ugwuanyi stated..

He advises other lenders to integrate PAPSS into their mobile banking apps.

The Pan African Payments Settlement System is a joint initiative of the African Export-Import Bank (Afreximbank) and the African Union. It was created to address the challenges of cross-border payments in Africa, such as high costs, long processing times, and limited accessibility.

Also speaking, Group Chief Conduct & Compliance Officer Access Bank PLC, Femi Jaiyeola said Africa is core to Access Bank’s strategy.

“And we are present in about 14 African countries counting. And what we’ve done is that we’ve decided that for every country, we’ are going to integrate with the PAPSS. So the West Africa monetary zone of the six countries we are present five, we have integrated as well. And I think this is a transformative project,” he stated.

He recalled that the head of PAPSS once said in “this is our own, and we should really take it.”

On restrictions over transaction amounts, he warns against over regulations, so that the country does not get stuck in the same regulatory environment that limited Fintech adoption.

He calls for streamlining of documentation requirements because the extant ethics manual manual in operation is bothersome not just for banks, but for customers as well. “We need to ensure that we don’t fall into that same trap with PAPSS, especially about who wants to drive adoption and ramp up the volumes, So the earlier we have the regulatory framework to drive it, the earlier the better it is for adoption.

“Banks are struggling with settlement and that has an impact on customer experience as well. So we need to make sure that in terms of settlement for PAPSS, we make sure we get it right. So that drives adoption customers are willing to use that platform to initiate their payments,”Jaiyeola cautioned. Head Enterprise Support Services, Nigeria Inter-Bank Settlement Systems (NIBSS) PLC, BolanleEnigbokan said though it is work in progress, the good thing is that “we have started well.”

He said African problems will be solved by Africans, whether we like it or not. “We might get help. But again, you need to consider how free that help is. In Africa, we have to sit down, think local, build solutions that can help us regularize and deal with the issues because we are now aware about challenges around trade.

“With technology, you can drive digitization of your processes, even the so-called legal frameworks that we are talking about, we can simplify them into workflows that can make it a lot easier. So for me, I think that there are a lot of opportunities that it brings,” he stated.

So in Africa, he stated, “We can actually be the pioneer. We can lead. Like I said, this is the journey. Those challenges will be there, but we will put our minds together, collaborate and work together. I believe that we can really get out of the woods and make it better as we proceed,“ Enigbokan stated.