Small businesses cry foul over EAC payment system

Saturday February 17 2024

The East African Payment System is out of reach for most micro enterprises, women, and marginalised communities in remote areas, who do not have access to bank accounts. PHOTO | SHUTTERSTOCK


Small businesses have attributed their apathy towards the East African Payment System (EAPS) to its focus on high-value transactions between commercial banks, locking them out. They say that the system, in its current format, is a deterrent to cross-border interoperability of digital payments.

“This is a missed opportunity because micro entrepreneurs, 70 percent of whom are women, are the backbone of East Africa’s economy. Their limited digitalisation is hindering financial inclusion-commerce and cross-border trade in the region,” Netherlands-based think-tank European Centre for Development Policy Management (ECDPM) says in a discussion paper dated October 2023.

According to ECDPM, which is working on international co-operation and development policy in Europe and Africa, the EAPS is facing low uptake from regional governments, and this is hindering seamless digital payments interoperability — the ability of systems to exchange information and work together in a coordinated manner without end user’s involvement.

“EAPS, which is designed as a real time gross settlement system facilitates high-value transfers of money or securities between different banks in the region but is unattractive for mobile network operators and unsuitable for most mobile money transactions which tend to be low in value,” it says in the paper titled Interoperability of Digital Payment Systems in East Africa.

“This means that in its current form, the EAPS is out of reach for most micro enterprises, women, and marginalised communities in remote areas, who do not have access to bank accounts but are the backbone of the informal economy and key drivers of economic growth.”

According to the report, high currency exchange fees in cross-border transactions continue to inhibit transactions despite the fact that the EAPS operate under a multi-currency system to avoid the exchange rate risk arising from dollar transactions.


Although the EAC central banks have made considerable progress towards the harmonisation of monetary and exchange rate policies, industry players still complain about high fees in cross-border digital transactions.

The EAPS which was launched in 2014 by regional central banks is currently a subject of review following reluctance by regional governments to carry out commercial transactions through the system.

Currently, Kenya, Uganda, Rwanda and Tanzania are on EAPS. Transactions in EAPS are currently dominated by Kenya.

However Kenya’s Central Bank has proposed a review of the EAPS together with the regional payments and settlemest System following its low uptake by the member countries.