By Mackie M. Jalloh
The Bank of Sierra Leone (BSL) has issued a directive mandating all commercial banks, mobile money operators, and payment service providers in Sierra Leone to fully integrate their domestic transactions into the country’s National Payment Switch, also known as the “Salone Pement Swich” (SaPS), by April 1, 2025.
This directive, announced on December 17, 2024, builds on the National Switch Directives 2023 and the National Payment Systems Act of 2022. It follows the successful pilot run of SaPS Instant Payment Service (IPS), which has demonstrated the system’s capacity to handle transactions efficiently across different platforms.
Background of the National Payment Switch
The National Payment Switch, launched in May 2023, is a significant step toward modernizing Sierra Leone’s financial system. SaPS allows for seamless transactions across Automated Teller Machines (ATMs), Point of Sale (POS) devices, internet banking, mobile payments, and other payment platforms.
Section 5 of the National Switch Directives 2023 requires all financial institutions licensed and operating in Sierra Leone to become and remain participants in the switch. This directive aims to enhance interoperability, reduce transaction costs, and improve efficiency in the country’s payment ecosystem.
Section 9(4) of the directive further mandates that all domestic transactions conducted with other payment service providers must be processed through the National Payment Switch. This includes ATMs, POS devices, and digital payment systems.
Key Requirements of the Directive
Effective April 1, 2025, the following measures will take effect:
- Domestic Instant Payments: All commercial banks and mobile money operators must process domestic instant payment transactions exclusively through SaPS Instant Payment Service (IPS).
- Card Transactions: All domestic card transactions between banks must be routed through the SaPS card switch.
- Fintech Integration: Financial institutions and mobile money operators must ensure that all domestic instant payments involving Fintech organizations are directed through SaPS IPS.
The BSL has emphasized that compliance with these directives is mandatory under Section 37 of the National Payment Systems Act 2022. Non-compliance will attract financial and other penalties as stipulated by the Act.
Why the Transition is Crucial
The transition to SaPS is expected to create a more unified, efficient, and secure payment environment in Sierra Leone. By eliminating the need for multiple bilateral agreements between financial institutions, the system will simplify payment processes and foster greater financial inclusion.
The National Payment Switch also aims to reduce reliance on cash transactions, promoting a cashless economy. This move aligns with global trends in financial digitization, offering Sierra Leoneans faster, more reliable, and accessible payment options.
Impact on Financial Institutions
For commercial banks, mobile money operators, and Fintech organizations, this directive represents a significant operational shift. These entities will need to upgrade their systems and integrate their platforms with the National Payment Switch to meet the April 2025 deadline.
The BSL has reassured financial institutions of its commitment to supporting the transition. Training programs and technical assistance will be provided to ensure a smooth migration to SaPS.
Penalties for Non-Compliance
The BSL has warned that failure to comply with the directive will result in penalties, including financial sanctions. These measures are designed to ensure strict adherence to the National Payment Systems Act 2022 and to maintain the integrity of the payment ecosystem.
Looking Ahead
The Bank of Sierra Leone’s directive represents a transformative moment for the country’s financial sector. By centralizing payment processing through the National Payment Switch, the initiative seeks to modernize Sierra Leone’s payment infrastructure, improve efficiency, and promote economic growth.
Financial institutions are advised to take immediate steps to align with the directive. The success of this transition depends on the collective effort of all stakeholders, including the banking sector, mobile money operators, and Fintech organizations.
As Sierra Leone moves closer to a cashless economy, the National Payment Switch will play a pivotal role in shaping the future of financial transactions in the country.
