Buna poised to transform cross-border payments in the Arab region and beyond

Buna was officially launched in February 2020 by the Arab Monetary Fund (AMF) and operates under the framework of the Arab Regional Payments Clearing and Settlement Organization (ARPCSO). ARPCSO was specifically established by the AMF to govern and oversee Buna’s operations, ensuring it provides an efficient and secure cross-border payment infrastructure.

It was designed to reduce reliance on costly and slow traditional systems by enabling multi-currency payments in both regional and international currencies in real-time. By facilitating faster and more transparent payments, Buna and ARPCSO together aim to foster economic integration across the Arab region, enhancing trade, remittances, and investment flows.

Currently, Buna facilitates payments across six currencies—US dollar (USD), euro (EUR), Saudi Riyal (SAR), Egyptian Pound (EGP), Jordanian Dinar (JOD), and Emirati Dirham (AED). With over 110 financial institutions onboard, Buna processes approximately 15,000 transactions per month, with a growth rate of 15% month-on-month.

During a recent conversation, Mehdi Manaa, CEO of Buna,  provided insights into its vision, achievements, and strategic expansion into new markets, including Africa, India, Pakistan and Europe.

Manaa has extensive experience in payments infrastructure and financial technology. Prior to joining Buna, he held senior leadership roles at the European Central Bank (ECB), where he was involved in developing and implementing real-time payment systems, including the TARGET Instant Payment Settlement (TIPS). His expertise in payment systems, regulatory frameworks, and cross-border financial transactions positions him well to lead Buna’s goals of improving financial integration in the Arab region and beyond.

Mehdi Manaa, CEO of Buna

Buna operates in a sizable market, with over $28 billion in remittances, $271 billion in trade flows and $127 billion in foreign direct investments within the Arab region. Additionally, payments and trade flows with global partners exceed $134 billion and $1.28 trillion, respectively, underscoring the growing need for efficient, cross-border payment solutions.

How the Buna platform works

Buna operates as a real-time gross settlement system (RTGS) that facilitates cross-border payments across multiple currencies, six days a week (Sunday to Friday). It is not mandatory for participants to be active in all six currencies. Financial institutions can choose the currencies they want to engage with and open accounts accordingly.

Its infrastructure is built on microservices-based architecture with a flexible system of application programming interfaces (APIs), allowing participating financial institutions to easily integrate with the platform. These APIs enable real-time connectivity for overlay services, ensuring smoother and more efficient transactions across different currencies and jurisdictions.

Manaa elaborated, “We offer real-time settlement between banks, allowing them to conduct cross-border transactions faster and more efficiently compared to traditional systems. This flexibility is crucial as the world increasingly demands faster, more secure transactions.”

He highlighted that Buna’s real-time settlement process is designed to reduce delays typically associated with traditional cross-border payments. Unlike the conventional nostro-vostro account arrangements, Buna enables direct settlements between participating banks, eliminating intermediaries and making the payment process faster and more cost-effective. He emphasised that Buna’s infrastructure allows 24 hours availability, ensuring that institutions can process payments or foreign exchange anytime, regardless of geographical boundaries or time zones.

Furthermore, Manaa pointed out that Buna provides participants with tools for liquidity management and foreign exchange (FX) management, enabling them to better control currency conversions and mitigate risks. He explained that participants have the option of conducting FX transaction with correspondent banks outside the platform or with member banks on the platform.

Ensuring robust regulatory compliance

Buna also incorporates robust anti-money laundering (AML) and combating the financing of terrorism (CFT) mechanisms to ensure compliance with international standards, making it a secure platform for processing cross-border transactions. This combination of operational efficiency, compliance, and multi-currency flexibility aims to position Buna as a leading solution for cross-border payments in the Arab region.

Manaa also stressed the importance of building trust through embedded AML/CFT compliance programmes. Buna’s approach to compliance goes beyond the usual requirements, ensuring that all cross-border payments are secure and meet international standards, fostering trust among participants.

“Regulatory compliance is one of our key strengths,” he added. “We’ve designed Buna to comply with international standards, ensuring that banks can rely on our platform to conduct cross-border transactions safely and securely.”

Buna’s core mission to facilitate multi-currency payments

Contrary to some misconceptions, Buna’s mission is not to reduce dependency on the USD. As Manaa explained, “Our goal is to offer flexibility for financial institutions to choose their currency of preference—be it USD, EUR, or a local currency.” Buna facilitates payments across multiple currencies, allowing participants to benefit from real-time settlement and improved efficiency without undermining the prominence of international currencies.

Buna’s core mission aligns with four strategic objectives: enhancing cross-border payment efficiency, empowering Arab economies, promoting the use of regional currencies, and streamlining trade relationships with key global partners. These objectives guide the platform’s continuous evolution as a hub for cross-border financial integration.

Manaa shared that based on current SWIFT data, 50-55% of cross-border transactions in the Arab world are in USD, while the remainder comprises regional currencies like the AED, which accounts for around 15% of transactions. This contrasts with SWIFT’s global currency usage share data, where USD dominates around 80% of cross-border payments. He noted that this more balanced split between the USD and regional currencies in the Arab region is aligned with Buna’s goal to promote the use of local currencies for intra-regional trade, but without seeking to disrupt the role of the USD in global trade. He clarified that Buna’s transaction share is not yet aligned with SWIFT’s global figures due to the gradual onboarding of banks and of currencies and the platform’s relatively early-stage implementation.

Buna also aims to promote the use of regional currencies within the Arab region, empowering banks to process transactions more effectively while minimising costs and delays associated with traditional systems.

Partnerships and MoUs to expand beyond the Arab world

A tangible milestone in expanding its cross-border payment capabilities beyond the Arab region was reached with Pakistan, where formal agreements have been signed, and the project is now in the implementation phase, making it a more tangible development. Manaa commented that Buna has signed memorandums of understanding (MoUs) with potential partners in Pakistan, India, Africa and Europe. However, the progress of agreements with other countries and regions varies, with some still in earlier stages.

Collaborating with global networks

While Buna provides a modern solution for cross-border payments, it does not seek to replace SWIFT. Instead, Buna leverages SWIFT’s network for transmitting payment instructions while offering real-time settlement through its proprietary system.

Manaa also mentioned that Visa and Mastercard could be potential collaborators, especially in facilitating remittance and card-based transactions. “We’re always exploring opportunities to collaborate with global networks, and we believe partnerships with organisations like Visa and Mastercard can complement our mission,” he explained.

Looking ahead at blockchain and CBDCs as the future

As the payment landscape evolves, Buna is considering supporting central bank digital currencies (CBDCs) if they are issued. Manaa explained that Buna is not actively engaged with CBDCs but is considering its readiness to support them if central banks in the region issue digital currencies. At present, no tangible actions have been taken.

Since its inception, Buna has made strides in improving cross-border payments across the Arab region. The platform’s potential partnerships with markets like India and Pakistan along with its expansion into regions like Asia, Africa and Europe, are set to propel it further.

However, challenges remain, particularly in encouraging wider adoption of regional currencies and expanding into new markets with complex regulatory environments. Nevertheless, Buna’s growth trajectory, coupled with its readiness to embrace emerging technologies, positions it well to lead the future of cross-border payments in the Arab region and beyond.

As Manaa concluded, “Buna is on a strong path. We’ve built a platform that connects regions, promotes financial inclusion, and drives economic growth. But the journey is far from over, there’s much more we can achieve.”