Today on The Settlement Layer, structural upgrades are advancing across multiple The Settlement Layer financial hubs. In Nigeria, the central bank's Monetary Policy Committee is holding rates steady against a backdrop of surging daily FX turnover, while South Africa's tax authority is launching a proactive program to bring certainty to transfer pricing. Meanwhile, the infrastructure for cross-border money movement continues to mature, as stablecoins gain institutional traction for diaspora remittances and regional central banks deepen their commitment to the PAPSS network.
Following the convergence of Nigeria's official and parallel foreign exchange rates we noted earlier this week, the Central Bank of Nigeria's Monetary Policy Committee maintained its benchmark interest rate at 26.5% for the second consecutive meeting. Prioritizing disinflation, Governor Olayemi Cardoso stated the Naira needs market competition rather than artificial protection, highlighting that daily foreign exchange market turnover now frequently exceeds $1 billion—a sharp recovery from the liquidity drop we tracked earlier this month.
Why it matters
The combination of a stable, albeit high, interest rate and surging FX liquidity is a critical signal for the Nigerian market. The over $1 billion daily turnover suggests the CBN's recent reforms are successfully attracting capital and normalizing the official market. For any business managing cross-border flows, this increased liquidity directly reduces settlement risk and improves the predictability of repatriating funds from Nigeria.
Three years after Nigeria launched a national blockchain policy aiming to generate $40 billion in economic value, the initiative is largely dormant, according to a Tuesday report. Experts argue the government's intense focus on regulating cryptocurrency trading has come at the expense of developing broader blockchain infrastructure for use cases like digital identity, supply chain, and land registry, limiting the country's economic potential.
Why it matters
The divergence between regulating crypto assets and building blockchain infrastructure is a critical distinction. While regulatory clarity on crypto is necessary, the lack of progress on foundational blockchain technology means Nigeria is missing out on potential efficiency gains in core economic sectors. For payment providers, this stalls the development of rails that could dramatically lower costs for identity verification, settlements, and trade finance.
The South African Revenue Service (SARS) has officially launched its Advance Pricing Agreement (APA) programme, with a pilot phase starting in 2026. The program allows multinational companies to proactively agree with SARS on the methods for pricing cross-border transactions between related entities. This initiative, detailed on a new dedicated webpage, aims to provide tax certainty and prevent future disputes over transfer pricing.
Why it matters
The APA program is a significant step toward improving the predictability of the tax environment for multinationals operating in South Africa. For payment gateways and their global merchants, this provides a mechanism to de-risk complex intra-company transactions and financial flows, directly affecting how profit repatriation and service fees are structured for tax compliance. It removes a major area of uncertainty for cross-border commerce into South Africa.
Building on the South African Reserve Bank's recent decision to prioritize PayShap over a retail digital rand, prominent e-commerce entrepreneur Andy Higgins predicts the instant payment system is now poised for widespread adoption. He argues that as pricing improves and transaction limits increase, PayShap could replace traditional EFT and even card payments for many use cases, mirroring the impact of instant payment systems like Pix in Brazil and UPI in India.
Why it matters
This forecast from a seasoned market operator signals an impending structural shift in South African payments. If PayShap becomes a ubiquitous and low-cost rail, it will commoditize the core act of payment processing, forcing gateways to compete on value-added services like fraud management, credit, and integrated business software rather than transaction fees alone. This is a critical strategic consideration for APS's product roadmap in its home market.
A new report from African Banker magazine and Backbase, surveying 277 banking executives across 37 countries, reveals that while 83% of African banks plan to increase AI investment, 33% lack formal frameworks to measure ROI. Legacy architecture is the primary obstacle, consuming over half of IT budgets. Fraud detection and transaction monitoring are delivering the clearest financial returns, driving the investment push into an 'accountability phase' where clear ROI is now demanded.
Why it matters
This report validates that the African financial sector's AI adoption is maturing from hype to a focus on tangible results, especially in fraud prevention. For a specialized provider like APS, this creates an opportunity. Banks struggling with legacy systems and ROI measurement are prime candidates for partnerships with nimble fintechs that can deliver production-grade, auditable AI solutions for fraud and risk management without requiring a full-stack overhaul.
With AI-assisted fraud growing, a Tuesday report outlines a modern, layered fraud prevention architecture for e-commerce merchants. It recommends combining gateway-level rules (like AVS/CVV checks) with pre-authorization AI decisioning (e.g., Stripe Radar, Signifyd), post-authorization monitoring, and specific strategies for BNPL and digital wallets. The analysis notes that coordinated fraud ring attacks increasingly mimic legitimate customer behavior, requiring sophisticated defenses.
Why it matters
This article provides a concrete, operational blueprint for architecting a modern fraud defense stack. It moves beyond high-level discussions of AI to name specific tools and their place in the transaction flow—pre- and post-authorization. For a lean team at APS, this framework is a valuable guide for product development and for advising merchants on how to layer defenses effectively.
Nigeria's fintech sector is battling a wave of sophisticated institutional fraud, driven by networks of rogue employees and insiders at banks and fintechs. These actors exploit vulnerabilities—such as unvetted contract staff and outsourced IT—to bypass security protocols and siphon funds. The stolen money is then laundered through lightly regulated channels, including some neo-banks, sports betting platforms, and crypto networks.
Why it matters
This reporting exposes a critical vulnerability at the human and process layer of Nigeria's digital payment ecosystem, moving beyond external threats. It underscores that technical security alone is insufficient. For any payment processor operating in the region, this requires a deeper level of counterparty risk assessment and reinforces the need for Zero Trust architecture, strict internal controls, and potentially biometric vetting for partners, as compromised institutional accounts can poison the entire payment chain.
Adding to the momentum from the Central Bank of Kenya's formal endorsement of the Pan-African Payment and Settlement System (PAPSS) earlier this week, the Central Bank of West African States (BCEAO) is launching a six-month pilot of the network. The initiative will involve more than 80 commercial banks across the eight-country WAEMU region, significantly expanding the footprint for local currency cross-border trade.
Why it matters
The BCEAO's pilot is a major step toward making PAPSS operational at scale, connecting a huge bloc of the West African economy. As more central banks and commercial banks integrate, PAPSS moves closer to becoming a viable, continent-wide alternative to SWIFT for intra-African trade, which could dramatically reduce costs and settlement times for merchants.
LemFi, a financial platform for diaspora communities, is partnering with crypto infrastructure provider BVNK to shift its cross-border settlement onto regulated stablecoin rails. The move aims to replace slow and expensive correspondent banking routes with near-instant, lower-cost value transfers for remittances, with the stablecoin layer operating invisibly to the end-user.
Why it matters
This partnership is a prime example of stablecoins being used as practical, behind-the-scenes infrastructure to solve a real-world problem—the high cost of remittances. It demonstrates a maturing market where digital assets are not the product, but the plumbing. For payment providers, this model offers a template for improving the cost and speed of cross-border settlement without requiring merchants or consumers to directly handle crypto.
Detailing the Busha Business and Tether partnership we noted yesterday, the Nigerian crypto platform's B2B arm confirmed Tuesday that its new licensed stablecoin infrastructure targets over 1,500 businesses across Nigeria and Kenya. The collaboration leverages USDT to offer faster cross-border payments, more efficient treasury management, and quicker settlement for international trade.
Why it matters
This partnership further solidifies the role of stablecoins as a utility for African B2B payments, moving beyond retail speculation. By providing a regulated on-ramp for businesses to use USDT for treasury and settlement, it directly tackles the persistent challenges of FX liquidity and slow cross-border transfers, offering a practical alternative to traditional banking rails for merchants.
At least 19 Kenyan banks and microfinance institutions are now offering sharply discounted fees on the PesaLink interbank transfer network. The new pricing includes free transfers for amounts up to KES 1,000 and a flat fee of KES 20 for transfers up to the KES 999,999 limit. This makes PesaLink significantly cheaper than Safaricom's M-Pesa for a wide range of transaction values.
Why it matters
This coordinated fee reduction represents a direct and significant challenge to M-Pesa's dominance in Kenyan domestic payments. By making bank-to-bank transfers cheaper, especially for mid-to-high values, the banking consortium is aiming to claw back market share. This could shift consumer and merchant behavior towards account-based payments, impacting the integration priorities for payment gateways operating in Kenya.
The National Bank of Ethiopia (NBE) is developing a regulatory sandbox for fintech firms to test cross-border online payment platforms, according to a Tuesday report. The initiative will reportedly allow for international payments up to an annual limit of $5,000, aiming to support e-commerce and fill a major gap in the country's digital payment ecosystem.
Why it matters
Ethiopia opening a supervised pathway for cross-border payments is a significant development. As one of Africa's largest and historically most closed economies, a formal sandbox signals a policy shift towards integrating with the global digital economy. This creates a potential new market for payment gateways, though the $5,000 annual limit suggests an initial focus on retail or small SME transactions.
Nigeria's FX Market Shows Signs of Stabilization The Central Bank of Nigeria held its benchmark interest rate at 26.5%, with the governor highlighting that daily FX market turnover now exceeds $1 billion, signaling a significant improvement in liquidity and market confidence. The focus remains on a market-driven, competitive Naira rather than artificial protection.
AI in African Banking Enters the 'Accountability Phase' A major new report on AI in African banking reveals that while investment is surging, a third of banks still don't measure ROI. Legacy systems are a key bottleneck, and the focus is now on finding clear financial returns, with fraud detection and transaction monitoring leading as the most impactful use cases.
Stablecoins Solidify Role as B2B Settlement Infrastructure Multiple partnerships this week underscore stablecoins' growing utility as backend payment rails. LemFi is partnering with BVNK to move its diaspora remittance settlement onto regulated stablecoins. Simultaneously, Busha Business is expanding its collaboration with Tether to offer licensed stablecoin infrastructure to merchants in Nigeria and Kenya, bypassing traditional, slower correspondent banking.
Regulatory Sandboxes and Frameworks Proliferate Central banks across the continent are actively creating structured environments for fintech innovation. Ethiopia is developing a sandbox for cross-border online payments, while Mozambique has just launched a new interoperable instant payment system. This trend signals a move towards enabling digital payments while maintaining regulatory oversight.
South Africa's Instant Payment System Gains Momentum Industry veterans predict PayShap is on the verge of widespread adoption in South Africa, potentially displacing traditional EFT and card payments. This follows recent moves to lower fees on the competing PesaLink network in Kenya, indicating a broader continental trend towards faster, cheaper, account-to-account payment methods.