Kenya’s instant payments network has plugged into a continent-wide settlement system that now links more than 240 financial institutions across Africa.
The partnership between Pesalink and the Pan-African Payment and Settlement System (PAPSS) allows banks and mobile money operators in Kenya to receive cross-border transfers in local currency.
Cross-border payments in Africa remain slow, costly, and heavily dependent on the US dollar. For Kenyan lenders facing tighter margins and growing regional trade flows, cheaper settlement could unlock new transaction volumes and defend fee income.
Pesalink, operated by Integrated Payment Services Limited (IPSL) and owned by the Kenya Bankers Association (KBA), connects over 80 banks, Savings and Credit Cooperative Organizations (SACCOs), fintechs, and telcos domestically.
PAPSS, an initiative of the African Export-Import Bank in collaboration with the African Union and the AfCFTA Secretariat, links more than 160 banks across multiple African markets.
“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,” csaid.
Until now, many payments between African countries have cleared through correspondent banks outside the continent, often in dollars or euros. That structure adds foreign exchange spreads, compliance layers, and delays.
According to the World Bank’s remittance data, sending money across African borders costs an average of 7% to 8% of the value transferred. Settlement can take up to a week, meaning for small traders moving modest sums, those delays erode margins.
Under the new arrangement, Pesalink acts as a technical connectivity provider in Kenya. A bank in, say, Ghana or Rwanda connected to PAPSS can route a payment to a Kenyan beneficiary, with settlement handled in local currencies rather than through offshore clearing banks.
The model mirrors earlier moves by central banks in West Africa to test PAPSS for trade settlements. Kenya’s inclusion signals East Africa’s deeper participation in the African Continental Free Trade Area (AfCFTA) payments agenda.
Cross-border volumes depend on pricing by commercial banks, foreign exchange liquidity in participating markets, and regulatory comfort. Kenyan lenders will need to decide whether to pass cost savings to customers or treat the new rail as another premium service.
There is also competition, including mobile money operators and regional fintechs that have built their own corridors for person-to-person transfers. The question is whether banks, using Pesalink’s real-time rails, can match that speed while offering broader account-based services.
