Instant-payment rails stall when nonbanks cannot enter

An instant-payment system can clear a transfer in seconds and remain commercially irrelevant to a large share of the market. Speed begins after a participant gets access. The difficult work often sits before the first message: licensing, technical certification, liquidity, settlement accounts and liability.

A 2026 World Bank paper on scaling instant payments in Africa identifies high compliance costs and unclear licensing for nonbanks as barriers. AfricaNenda's work on inclusive systems places access, price, reliability and recourse inside the design problem. Both sources treat the rail as infrastructure governed by rules, not as a product that adoption will discover on its own.

Admission decides distribution.

The switch is the centre, not the edge

A central switch routes instructions among participating institutions. Customers usually reach it through a bank, mobile-money provider, fintech or another regulated firm. If only a small group can connect directly, everyone else needs a sponsor or commercial agreement with one of them.

Indirect access can work. A sponsor handles settlement and compliance while a smaller provider handles customers. It can also add cost, delay product changes and leave the provider dependent on a competitor. The scheme should disclose direct and indirect participation routes, eligibility, decision time and grounds for refusal.

Technical connection carries real work: secure messaging, authentication, fraud monitoring, reconciliation, uptime and testing. A rule that allows nonbanks on paper has little effect if certification assumes a bank's staffing and systems. Proportionate requirements still need to protect the rail. Proportionate does not mean optional.

A licence may stop one step short

A payment-service licence tells a firm what regulated activity it may perform. It may not grant access to a central-bank settlement account or the instant-payment switch. Those permissions can sit under different laws and institutions.

Map the full route from licence to live transaction. Which regulator authorises the business? Which body operates the scheme? Who approves technical connection? Where does final settlement occur? Who can hold prefunding? If each answer names a different institution, publish the handoffs and service standards.

Unclear categories create investment risk. A fintech can spend on integration, then learn that its licence permits customer service but not direct scheme membership. Regulators can reduce that risk with an eligibility matrix and a pre-application process that produces a written answer.

Existing participants need certainty too. If a bank sponsors a nonbank, the contract must divide customer due diligence, transaction monitoring, reporting, complaints and losses. A vague “partner” label will not allocate liability after fraud.

Prefunding can become an entry fee

Instant systems need confidence that accepted payments will settle. Some schemes require participants to hold cash or collateral in advance. The control limits settlement risk, but it ties up money.

A large bank can spread that liquidity across high transaction volume. A smaller provider may lock up the same operational minimum against a thin early flow. Add connection fees, security audits, staff and sponsor charges, and access becomes economic before it becomes legal.

The remedy isn't to remove liquidity protection. Scheme designers can examine tiered limits, real-time position information, automated funding alerts and settlement arrangements that fit participant risk. Every alternative has operational consequences. The public design document should explain who carries a shortfall and how quickly the scheme can stop a failing participant.

Providers should model the balance. Record peak outgoing value by time band, incoming offsets that can be relied upon, required buffer, funding cost and the penalty for a failed position. An average daily value can hide a short morning peak.

A closed participant list weakens the customer proposition

Reach matters because a payment is useful only when the recipient can receive it. Separate registered accounts from active, addressable endpoints. A scheme may connect many institutions while customers still struggle to identify recipients across wallet, account and phone-number systems.

Price follows the chain. The scheme charges participants, sponsors charge indirect members and providers charge customers or merchants. A free customer transfer can be funded by merchant fees, float income or another service. Inclusion analysis needs the full commercial model, not the visible fee alone.

Nonbanks can add distribution among merchants, small firms and users underserved by branch networks. They can also introduce weak controls if oversight lags. Admission should be open to firms that meet transparent risk requirements, with supervision based on what they do and the exposure they create.

The regulator should publish participation and concentration. How many firms connect directly? What share of transactions passes through the largest participants? How many applications were approved, rejected or remain pending? Aggregate reporting can answer those questions without disclosing a firm's security design.

Inclusion continues after connection

A live participant can still exclude users through documentation, device requirements, inaccessible interfaces or poor dispute handling. AfricaNenda's focus on inclusive design keeps these edges visible. Test onboarding with the people a policy claims to reach. Measure abandoned registration and failed transfers, not downloads.

Recourse needs the same speed as the payment. Customers need to know which provider receives a complaint, what evidence is required, when a provisional response arrives and who decides a dispute between institutions. A transfer can be technically final while a fraud or error claim remains open under scheme rules.

Service reliability should be reported end to end. A central switch can meet its uptime target while one major participant fails. Customers experience the unavailable app, not the switch's dashboard.

The access test

A credible instant-payment programme can answer five questions in public: who may participate, what it costs to connect, where settlement occurs, who covers a loss and how a rejected applicant appeals. It should show transaction reach and failure rates after launch.

Infrastructure funding is visible and politically attractive. Admission rules look procedural. Yet those rules decide whether the rail supports competition or becomes a faster service for the institutions already inside.

Sources

• World Bank, March 2026: Scaling Instant Payments in Africa
• AfricaNenda Foundation, 2026: Pan-African trade and inclusive instant payments focus note