The Caribbean’s Payment Rail Moves to Pilot
CAPSS has entered its pilot phase, bringing real-time local currency payments to 11 Caribbean nations.
This article appears in the October issue of Global Finance Magazine.
The long-awaited CARICOM Payment and Settlement System (CAPSS), designed to transform cross-border payment settlement across the Caribbean, has entered its pilot phase, putting the region’s vision for real-time payments in local currencies into practice across 11 jurisdictions.
Developed by the region’s central banks in partnership with the African Export-Import Bank (Afreximbank), CAPSS connects national payment systems to enable real-time cross-border payments in local currencies, allowing businesses and consumers to bypass the U.S. dollar as an intermediary.
“While background settlements will still involve U.S. dollars among central banks, day-to-day transactions will use local currencies — a key innovation with broad potential,” said Timothy Antoine, governor of the Eastern Caribbean Central Bank, which serves eight Caribbean countries and territories that share a common currency.
Cutting Costs
The project aims to boost intra-CARICOM trade, with goods exports to regional partners accounting for roughly 8% of the bloc’s total goods exports, according to the IMF.
Settling directly in local currencies cuts foreign exchange conversion costs and makes smaller cross-border transactions worthwhile, which matters most to small- and mid-sized businesses, who pay the highest relative costs for international payments.
“If for instance, I am in Barbados and I want to buy goods from Trinidad and I don’t have the U.S. dollars to make that payment, then it becomes simply wishful thinking. We think that stifles trade,” said Okechukwu Ihejirika, acting chief operating officer at Afreximbank’s Caribbean office.
CAPSS also offers a route around the region’s shrinking correspondent-banking network. Research by the Economist Intelligence Unit in 2024 found that about 40% of correspondent banks had withdrawn from the Caribbean over the previous 15 years.
An IMF working paper published in May, “Mind the Gaps: Caribbean Trade Patterns and the Connectivity Constraint,” found cross-border banking relationships lift CARICOM trade at less than half the global rate.
Modeled On African Payment Rail
The system is modeled on the Pan-African Payment and Settlement System, or PAPSS, launched by Afreximbank and the African Union in 2022. PAPSS provides a framework for real-time cross-border payments in local currencies and now connects banks and payment providers across 16 African countries.
The Caribbean push began in October 2023, when every CARICOM central bank adopted PAPSS as its preferred settlement system.
A proof of concept took place in February 2025 at the Central Bank of The Bahamas, where a live payment between Barbados and The Bahamas settled in each country’s own currency, with no dollars passing between them. Afreximbank and PAPSS provided a design already running in Africa, while payments software firm Montran Corp. built the connection between the two national systems. Trinidad and Tobago’s central bank took part, and Suriname sent an observer.
Governors expanded the test last November. CARICOM’s central bankers meet again in November, the next point at which the timetable could firm up.
Beyond the pilot, central banks plan to link CAPSS to PAPSS, building a payment bridge between Caribbean and African markets.
Thomas Monteiro is a contributing writer based in Spain.
