Rwanda and Tanzania are set to integrate their instant payment systems as part of a broader plan to enhance cross-border transactions in the East African Community (EAC), bringing the bloc a step closer to a vision projected to boost trade and regional cooperation.

The monetary authorities of the two countries have begun talks to link their respective instant payment systems, allowing citizens to seamlessly send and receive money in their local currencies across the border in real time.

The EAC Secretariat, which in May launched a plan to link all of the region’s instant payment systems, said the Rwanda–Tanzania pilot is a critical first step in reducing the cost of cross-border transactions.“This preparatory work marks a pivotal milestone in our regional payment system integration agenda, moving us closer to a single regional instant payment ecosystem that will facilitate secure, affordable, and real-time transactions across borders,” said Daniel Murenzi, the Secretariat’s principal information technology officer.

Across the eight-member bloc, seven such systems exist in four countries – Kenya, Uganda, Tanzania, and Rwanda – while the remaining countries rely primarily on private mobile money or banking platforms for digital transactions.

The linking of Rwanda’s RSwitch and Tanzania’s TIPS will enable citizens of both countries to send and receive money in real time via bank or mobile money accounts, addressing one of the region’s biggest barriers to trade.“The ability to make and receive instant, secure payments will greatly enhance trade and commerce, allowing businesses to settle invoices with suppliers and partners seamlessly,” noted the Secretariat in a statement.“This efficiency reduces operational friction and unlocks new opportunities for growth and market expansion within the region.”Currently, East Africa has some of the world’s costliest cross-border money transfer corridors, due to the absence of a unified instant payment system.

On average, it costs about 32 percent of the transaction amount to send $200 from one country to another using existing channels, including banks and mobile money, while in other parts of the world, the cost is as low as one percent.

Sending money from Tanzania to Rwanda is particularly expensive, with costs reaching 44 percent of the transaction amount.

Tanzania is specifically a costly country to send money from, with all the remittance corridors originating from the country costing at least 30 percent of the amount being sent.

With the linking of the two instant payment systems, these costs are expected to fall. “It extends the reach of formal financial services by making cross-border transactions as simple as a domestic transfer, thereby empowering a broader segment of the population, from small-scale merchants to individual consumers, to participate more fully in the regional economy,” the Secretariat said.

To support the rollout of the regional payment system, the EAC is also working to harmonise regulations, strengthen underlying infrastructure, and build technical expertise on payments across all eight member states.

The bloc’s long-awaited single currency has been repeatedly delayed, with a new target set for 2033, though many macroeconomic convergence criteria remain unmet by the member States.

Meanwhile, the East African Payments and Settlement System (EAPS), launched in 2013 to facilitate high-volume transactions between banks and large corporations, is gaining prominence. In the year to June 2024, EAPS recorded a 40 percent increase in transaction volumes to hit $2 billion.

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