The East African Community’s Monetary Affairs Committee (MAC) has approved the EAC Cross-border Payment System Masterplan which aims to reduce the cost and time of cross-border payments, making transactions faster and more affordable for businesses and individuals.
- •Cross-border payments within the EAC remain costly, averaging 7% of the transaction value, well above the global average target of 1% for retail payments and 3% for remittances.
- •The masterplan seeks to harmonise policies and regulations, promote infrastructure development, build capacity, and enhance equitable access.
- •It also lays the groundwork for future innovations, such as a regional digital currency or Central Bank Digital Currencies (CBDCs).
“The successful implementation of the EAC Cross-Border Payment System Masterplan will enhance trade, investment, and economic collaboration across the region,” Aime Uwase, EAC Director of Planning said.
The masterplan identifies several critical challenges, including fragmented regulatory frameworks, limited interoperability between national and regional payment systems, high transaction costs, slow settlement processes, gaps in financial inclusion, and weak consumer protection mechanisms.
To tackle these, it includes four main pillars:
Policy and Regulatory Harmonisation: Establishing harmonised regulatory environments to enhance compliance, reduce risks, and promote interoperability among payment service providers (PSPs).
Infrastructure Development and Modernisation: Strengthening and modernising payment systems to facilitate faster, more cost-effective transactions, including the expansion and enhancement of the East African Payment System (EAPS) and the development of a regional instant retail payment switching mechanism.
Financial Market Deepening: Ensuring individuals, businesses and financial institutions across the Partner States have equitable access to cross-border payment systems.
Capacity Building: Developing technical expertise, regulatory capabilities, and financial literacy to support the modernisation of payment systems and ensure their sustainability.
