There is no better time than now to bring financial innovation to the table, and sometimes, these efforts occur first in regions one would least expect. As of yesterday, all of the seventeen retail banks in Ethiopia are now part of one national payment system. This news sets an attractive precedent for Fintech players looking to collaborate with banks and financial institutions.
The National Payment System of Ethiopia
When people think about banks and finance, the discussion will ultimately turn to the continent of Africa. As most people are well aware of, the banking infrastructure and economy of Africa cannot be compared to the Western world by any means. This has attracted the attention of various Fintech players who are looking to gain a foothold in the region.
But at the same time, it has become clear that bringing Fintech and Finserv to Africa will be a road filled with many challenges. For example, it took until yesterday for the country of Ethiopia to see a national payment system where all seventeen banks in the country participate in. That news came as quite a surprise to a lot of people in the Western world.
Fintech innovation and disruption are all about collaboration, and it is positive to see Ethiopian banks on the same page for a change. Establishing a national payment system is an important step in the right direction towards building a better ecosystem for everybody. EthSwitch, as this network is called, is backed by the Ethiopian Banker’s Association, and the National Bank of Ethiopia.
As a result of this collaboration, all involved parties are now part of a centralised payment solution. While this is not ideal in an era where decentralisation is the main buzzword, it is still a significant effort. For the consumer in Ethiopia, this is very positive news, as they can now access services through all of the ATMs in the country, and make point of sale payments through any terminal.
EthSwitch S.C CEO Ato Bizuneh Bekele told the media:
“All connected member banks now benefit from interoperability as well as providing a new level of convenience and access to Ethiopian citizens, merchants, and organizations. As a result of our relationship with BPC Banking Technologies, it became obvious that the new system, powered by SmartVista, that the Ethiopian financial ecosystem will find new levels of efficiency, availability and accessibility while also significantly reducing the levels of cash usage. Currently the system integrates over 1500 ATMS, over 13,000 POS-terminals, and 2.5 million cardholders all over the country. “
In the long run, the EthSwitch national payment system should bring more business to Ethiopia over the coming years. Further online payment services will be developed, which opens up opportunities for Fintech players looking to make a name for themselves in Africa. Once that happens, decentralising the national payment system without fracturing the fragile ecosystem can commence.
Header image courtesy of Shutterstock
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