Pan African Payment and Settlement Systems(PAPSS)
This is a central Financial Market Infrastructure (FMI) that supports payment arrangements for the purpose of expanding the international trade of African states, and to facilitate central bank’s economic and financial integration. PAPSS is currently live in the West African states Monetary Zone (WAMZ) in the following countries: Nigeria, the Gambia, Sierra Leone, Liberia, Ghana, and Guinea.
Some of the Benefits
Cheap
Reduction in costs associated with correspondent banking fees and central delays.
Easy
Enables client's to fully fund their trade obligations as against the current fragmented client’s FX purchase model.
Fast
Quick payment in local currencies.
Seamless
Removes the dependencies on third currencies and correspondent banking; facilitates intra-African trade.
How to Get It
- Submit PAPSS application form for both visible (Form M/NXP) and invisible trade (Form A) transactions.
- Eligible transactions are as defined in the CBN FX manual.
- Importation of goods must be of African origin
- The beneficiary must be in a PAPSS-enabled country.
- The beneficiary bank must either be a PAPSS participant or linked to a PAPSS participant bank.
- Instruction must state the Exchange control document reference (Forms A, M, or NXP) of the transaction and remittance details.
Transaction Process
- Client submits a PAPSS application request at the branch
- Due diligence is conducted on the application form.
- IBC authorizer checks for completeness and correctness
- CBN approval is obtained for the transaction.
- Client Naira account is debited for principal and related charges.
- The beneficiary receives payment in their local currency
- Customer received notification.
- Settlement is carried out in local currency.
What you Get
- Quick payment in local currencies.
- Guarantees the final settlement of the funds to the recipient participant.
- The beneficiary has immediate availability of funds.
- Removes the dependencies on third currencies and correspondent banking; facilitates intra-African trade.
- Drive the Africa Continental Free Trade Area agreement (AfCFTA) to yield growth in transactional activities (trade and payments) from corporates and retail clients.
- Reduction in costs associated with correspondent banking fees and central delays.
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How to Get It
-
Transaction Process
-
What you Get
- Submit PAPSS application form for both visible (Form M/NXP) and invisible trade (Form A) transactions.
- Eligible transactions are as defined in the CBN FX manual.
- Importation of goods must be of African origin
- The beneficiary must be in a PAPSS-enabled country.
- The beneficiary bank must either be a PAPSS participant or linked to a PAPSS participant bank.
- Instruction must state the Exchange control document reference (Forms A, M, or NXP) of the transaction and remittance details.
- Client submits a PAPSS application request at the branch
- Due diligence is conducted on the application form.
- IBC authorizer checks for completeness and correctness
- CBN approval is obtained for the transaction.
- Client Naira account is debited for principal and related charges.
- The beneficiary receives payment in their local currency
- Customer received notification.
- Settlement is carried out in local currency.
- Quick payment in local currencies.
- Guarantees the final settlement of the funds to the recipient participant.
- The beneficiary has immediate availability of funds.
- Removes the dependencies on third currencies and correspondent banking; facilitates intra-African trade.
- Drive the Africa Continental Free Trade Area agreement (AfCFTA) to yield growth in transactional activities (trade and payments) from corporates and retail clients.
- Reduction in costs associated with correspondent banking fees and central delays.
Frequently Asked Questions (FAQs)
What has changed with PAPSS?
The CBN released a revised circular on the removal of transaction limits on PAPSS for Trade and payment services by introducing the SSA3 model. This circular was released on 12 March, 2024.
What restrictions have been removed for PAPSS?
- Removal of all restrictions and limits on Pan African Payment and Settlement System (PAPSS). Including $20,000 and $200,000 quarterly limits per individuals and Authorized Dealer Banks (ADBs) respectively.
- Removal of the restrictions of only Trade backed and Inwards Transactions
- ADBs are allowed to source for FX for settlement of PAPSS transactions through the Nigerian Foreign Exchange Market with no recourse to the CBN.
- All export proceeds repatriated under PAPSS shall be subject to certification by the respective processing banks.
- All documentation requirements stipulated in the CBN Foreign Exchange Manual and extant Circulars shall continue to apply.
Does this mean that I can pay for services via PAPSS?
Yes, both payment for services and trade can be made via PAPSS if the underlying transaction and documentation aligns with the requirements stipulated in the CBN FX manual (so Form A and Form M transactions can be processed via PAPSS) .
What will be the standard exchange rate?
The prevailing exchange rate between the payment countries will be populated daily on PAPSS and be used in cross-rates conversion between the Naira (NGN), and the beneficiary destination currencies. All rates will be updated daily on the banks processing platforms (iBranch).
Is there any transfer limit out of Nigeria?
There is no limit on both inflows and outflows out of Nigeria.
What types of transactions can be processed via PAPSS?
All Form A and Form M type transaction can be processed via PAPSS as long as the destination country is part of the PAPSS participants.
Who can deal in PAPSS trade? Is it open to individuals or strictly to corporate (exporters and SMEs)?
It is open to both individuals and corporates.
For Trade transactions Will form M be opened in the local currency of the supplier’s country or USD?
The form M for import and form NXP for export will all be in USD or any of the specified currencies listed in Memorandum 3 of the Foreign Exchange Manual.
What or which currency will be quoted on the proforma invoice as the basis for the contract of sales?
The USD or any of the specified currencies listed in Memorandum 3 of the Foreign Exchange Manual.
Are there provisions for border control enhancements to support logistics for physical goods exchange between participating countries?
While any measures towards improving trade facilitation are welcome and will be supported, PAPSS will run on the existing system or process. No change would be made just because of PAPSS.
What currency should be used for export process certification? Since export proceeds are received in local currency?
Certification will be in USD.
Will there be account name and number validation as part of the payment process?
Account number validation of the beneficiary is part of the payment process. In addition, before initiating a transaction, an account enquiry can be carried out.
Are validations automatic? Will PAPSS be integrated with payment settlement systems in different countries? What is the solution to outdated payment settlement systems?
Yes – validation is done automatically.
Yes – PAPSS is integrated to national payment switches (NIBSS for Nigeria). PAPSS can support the upgrade of outdated payment systems.
How fast can the beneficiary receive funds using PAPSS?
Receipt of funds via PAPSS is instant (within 20 seconds).