THE use of East Africa Payment System (EAPS) is picking up as traders and commercial banks in the East African Community (EAC) take advantage of facility launched some two months ago.
EAC member states launched an integrated real-time cross-border payments system on May 24, which is designed to harmonise payment systems with a view to ease intra-regional trade. Though it may be early to give an assessment on the new payment system, records show that transactions are increasing.
And with the thriving cross-border trade, prospects are high that the upward trend on the use of the system will be maintained. “The new integrated payment system has been well received by traders.
We see transactions picking up since it was launched,” the Central Bank Director in the Directorate of National Payment Systems, Ms Lucy Kinunda told the ‘Business Standard’ last week at the on-going 38th Dar es Salaam International Trade Fair (DITF).
The new system is currently operational between Tanzania, Kenya and Uganda, successfully linking Tanzania Interbank Settlement System (TISS), Kenya Electronic Payment and Settlement System (KEPSS) and Uganda National Interbank Settlement (UNIS).
It operates on a real time gross settlement basis by utilizing the linkage between the various Partner States’ Real Time Gross Settlement (RTGS) systems using SWIFT (Society for Worldwide Interbank Financial Telecommunication) messaging network for safe and secure delivery of payment and settlement messages to each other.
The system works in the same way as the central banks’ RTGS, which allows for the movement of cash between different banks and branches and is increasingly being used in the region in place of cheques.
However, it has a cross-border functionality to simplify transactions and reduce the cost incurred in payments in commissions and other charges during cross-border money transfers.
According to Ms Kinunda, Rwanda is expected to join the integrated regional payment system this month as preparations to link up are in the final stages. Burundi is in the process of implementing the RTGS system and is expected to join EAPS once the system is in place.
Ms Kinunda said records show transactions to and from Kenya were leading due to the nature of business trend in the region where there were 19 transactions involving 749.29m/-, Ksh 148.5m/- and Ushs 24.7m/-.
“We see the enthusiasm among commercial banks and traders building up as it facilitate intra-regional trade by reducing costs and risks in money transfers across border,” she said.
“It is more convenient to users and it is real time based. Cross-border transfers take from one to two days,” she said. The new system is part of a larger plan by the EAC economies to integrate their money and capital markets and has been under development for over a year.
It uses local currencies of East African countries — the Kenya Shilling, Tanzania Shilling and Uganda Shilling. It has so far proved to be a secure, effective and efficient funds transfer mechanism that enhances efficiency and safety of payments and settlement within the region.
Source: Daily News
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