FirstBank Bets on PAPSS as Africa’s Local-Currency Payment Revolution Gathers Pace

FirstBank is expanding the use of the Pan-African Payment and Settlement System (PAPSS) across its digital banking platforms as Nigerian banks position themselves for a larger role in Africa’s emerging cross-border payment market.

The development comes as African countries intensify efforts to reduce their dependence on third-party currencies and correspondent banking networks for intra-African trade.

For decades, businesses trading between African countries have often had to route payments through international banking centres, frequently converting local currencies into US dollars before converting them again into the currency of the destination country.

PAPSS was designed to address that challenge by enabling cross-border transactions between participating African countries in local currencies.

PAPSS expands across Africa

Officially launched in January 2022 by Afreximbank and the African Continental Free Trade Area (AfCFTA), PAPSS provides infrastructure for real-time cross-border payments and settlement across participating African markets.

The system allows a customer in one African country to initiate a payment in their local currency while the recipient receives funds in another African currency, without both parties having to directly source or hold foreign currency for the transaction.

PAPSS currently operates across 28 African countries, including Nigeria, Ghana, Kenya, Liberia, Gambia, Guinea, Sierra Leone, Zimbabwe, Zambia, Tanzania, Uganda, Malawi, Gabon, Guinea-Bissau, Cameroon, Rwanda, Algeria, Egypt, Morocco and Djibouti.

The network also expanded beyond Africa in October 2023, when the 15 member states of the Caribbean Community (CARICOM) joined the system.

The expansion is significant for the African Continental Free Trade Area, which seeks to deepen trade among African economies by reducing barriers to the movement of goods, services and capital.

FirstBank integrates PAPSS into digital channels

FirstBank has integrated PAPSS into its LIT App, FirstMobile and FirstOnline platforms, allowing customers to make cross-border payments using local currencies.

The bank says customers do not require special onboarding to use the service. Users can log into any of the participating digital channels, select PAPSS and initiate transactions.

Individuals can currently transact through the digital channels up to the local-currency equivalent of $2,000 per month, while corporate customers have a monthly limit equivalent to $5,000.

Transactions above those thresholds can be processed through FirstBank branches, subject to the submission of the required foreign exchange documentation.

The arrangement reflects the broader regulatory push by Nigerian authorities to make PAPSS a more widely used channel for cross-border transactions.

CBN pushes banks towards PAPSS

The Central Bank of Nigeria (CBN) directed banks operating in the country in April 2025 to adopt PAPSS and begin originating transactions under the revised framework.

In a circular referenced TED/FEM/PUB/FPC/001/006 and dated April 28, 2025, the apex bank outlined changes intended to increase participation by banks, exporters, importers and individuals.

The CBN also urged businesses and individuals involved in cross-border transactions to familiarise themselves with the revised requirements and take advantage of PAPSS.

A major regulatory change had already occurred in March 2024, when the CBN retired the SSA-1 model and introduced the SSA-3 framework.

Under the SSA-3 model, commercial banks such as FirstBank can hold and fund their own US dollar settlement accounts with Afreximbank.

While banks provide the foreign exchange required for settlement, PAPSS facilitates the underlying transactions in local currencies and supports the settlement of net positions between participating banks.

Cost and speed become key selling points

One of PAPSS’s major attractions is its potential to reduce the cost and delays traditionally associated with correspondent banking.

Transaction fees are capped at $16, while payments can be completed within minutes and are available around the clock.

For African businesses, this could have important implications.

A Nigerian SME selling goods to a customer in Ghana, for example, could receive payment in naira while the buyer makes the payment in cedis, reducing the need to navigate multiple correspondent banks and foreign-currency conversions.

The system could also make cross-border payments more accessible to smaller businesses that have traditionally found international payment channels expensive or cumbersome.

PAPSS and the race for Africa’s payment market

The expansion of PAPSS also reflects a wider competition to build the financial infrastructure that will support Africa’s increasingly integrated economy.

As intra-African trade grows under AfCFTA, the ability to move money quickly and cheaply across borders is becoming just as important as removing tariffs and physical trade barriers.

For banks, participation in PAPSS provides an opportunity to remain central to that emerging payment ecosystem.

For regulators, the system offers a mechanism for promoting financial inclusion and reducing dependence on external payment infrastructure.

For businesses, faster settlement could improve cash flow, reduce transaction costs and make it easier to reach customers in other African markets.

However, challenges remain.

PAPSS still operates within regulatory and foreign-exchange requirements, while transaction limits and documentation requirements apply to certain categories of users.

There is also the question of adoption. Businesses accustomed to using the dollar for international transactions will need to develop confidence in local-currency settlement and the reliability of the new payment infrastructure.

Still, with the CBN encouraging Nigerian banks to participate and institutions such as FirstBank integrating PAPSS into their digital channels, the system is moving beyond an infrastructure project towards becoming a practical payment option for African businesses and consumers.

If adoption continues to expand, PAPSS could gradually reduce the role of third-party currencies and correspondent banking in African trade bringing the continent closer to a financial system in which African businesses can trade with one another using African currencies and payment infrastructure.