Africa turns its attention to card payments and away from Account-to-Account (A2A) as part of a continent-wide initiative.
A consortium of African financial and payment service providers has launched PAPSSCARD, the continent’s first Pan-African card scheme, aiming to boost financial sovereignty and independence.
Announced on June 27 at Afreximbank’s Annual Meeting in Nigeria, African Export-Import Bank (Afreximbank), the Pan-African Payment and Settlement System (PAPSS) and Mercury Payment Services (MPS) announced the launch of a new debit and credit card initiative.
The system is currently operational in 16 countries, allowing cardholders to spend their national currencies across all available territories. Central banks in each country in which the initiative is live will be responsible for expanding this reach and growing adoption.
According to John Bosco Sebabi, Acting CEO of PAPSSCARD, the card scheme is set to improve the retail sector for small and medium businesses, as well as consumers.
“[The PAPSSCARD] 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.”
However, the main aim is to reduce reliance on global schemes.
“For too long, Africa’s reliance on external payment systems has impeded trade, increased costs, and compromised control over our financial data. PAPSSCARD changes that. It empowers us to move money swiftly, securely, and affordably across our borders,” said Afreximbank President and Chairman of the Board of Directors, Benedict Oramah.
“It is a transformative step towards strengthening intra-African trade and preserving value within the continent.”
Are cards making a comeback?
Africa is not alone in this mission, with Europe recently increasing its efforts to create a sovereign pan-European payment system.
On June 22, the European Payments Alliance and European Payments Initiative announced a partnership that brings together some of the continent’s most widely used mobile payment providers.
However, what makes Africa’s sovereignty-inspired move interesting is its current payment preferences. The continent is known for its love of A2A payments and adoption of QR code transactions and mobile micro-loans, resulting in Africa leap-frogging the traditional card space.
While this shift back to traditional card payment infrastructure may be more of a glance than a full stare, it still opens up opportunities for merchants, consumers and rail providers watching from the sidelines.
Danielle du Toit, COO of the Fintech Association of South Africa, told Payment Expert this launch is less surprising than it might initially appear
“It could possibly represent a logical and strategic progression in Africa’s payment evolution… The launch could signal a bold move toward financial sovereignty and true intra-continental commerce,” she said.
Du Toit, who is also President of Sub-Saharan Africa for African Women in FinTech & Payments, explained it will finally level the playing field, cutting out expensive intermediaries and unlocking new customer bases for merchants.
Additionally, consumers can expect a more seamless experience, with du Toit highlighting currency exchange as one of the biggest burdens on African payments. Lastly, for fintechs, she sees it as a green light to innovate around issuing, payments and financial inclusion on African terms.
Asked what the biggest challenge the initiative faces. She replied:
“The standard challenge most face in this space. Overcoming habits and infrastructure that are built around global card networks like Visa and Mastercard, which we all know currently dominate formal payments across the continent,” she said.
“Merchants may be reluctant to change since trust comes with legacy. Consumer awareness is always a major stumbling block. So, without really deep connections and solidified partnerships, winning people over will take time and money, and may even cause failure. Where there is a will, there is a way and people are awaiting disruption.”
