In a groundbreaking move earlier this week, EthSwitch, Ethiopia’s national switch operator, unveiled its National Payment Gateway at an event held at the Skylight Hotel.
The gateway is poised to transform Ethiopia’s digital landscape by simplifying and making online payments more affordable.
This article delves into the key features of the National Payment Gateway, its impact on the financial ecosystem, and the concerns it has raised among local fintech startups.
Empowering E-Commerce and Merchants
During the launch ceremony, Yilebes Addis, CEO of EthSwitch, emphasized the gateway’s role in empowering Ethiopia’s e-commerce and merchants.
The National Payment Gateway ensures interoperability, allowing merchants to receive payments from any financial institution.
Supported payment methods include debit cards, bank accounts, wallets, QR codes, and aliases (phone numbers).
Inclusive Ownership and Regulatory Support
EthSwitch, as the national switch operator, boasts inclusive ownership shared among the National Bank of Ethiopia, all banks, microfinance institutions, mobile money service providers, and payment processors.
This inclusive approach ensures that no financial player is excluded.
The National Payment Gateway aligns with Ethiopia’s national payment strategy, addressing the lack of a payment gateway as a hindrance to digital payment adoption.
Pilot Testing and Full-Scale Commercialization
Pilot testing for the National Payment Gateway commenced in July 2023, following approval from the National Bank.
The successful pilot involved limited financial institutions, paving the way for full-scale commercialization.
While debit cards are currently supported, the gateway plans to incorporate payments using accounts, wallets, and aliases in early 2024.
Impact on Fintech Startups
The introduction of the National Payment Gateway has triggered concerns among local fintech startups. Previously, these startups, such as Chapa, SantimPay, and ArifPay, made strides in the online payment sector. However, the new gateway challenges their direct integration with banks, reshaping the digital financial landscape.
EthSwitch’s Role and Fintech Adaptation:
EthSwitch, akin to India’s National Payments Corporation, plays a pivotal role in creating a standardized payment structure for all financial service providers.
While fintechs worry about banks leveraging their resources and access to the payment API, EthSwitch emphasizes that its customers remain financial institutions and digital financial services providers.
Fintechs are urged to focus on value addition in this evolving landscape.
Stimulating E-Commerce Growth
With the National Payment Gateway in place, EthSwitch aims to stimulate the growth of Ethiopia’s e-commerce sector.
The gateway’s integration with ArifPay’s payment gateway is already underway, and EthSwitch has committed to keeping fees for its payment gateway free for at least six months to encourage widespread adoption.
As Ethiopia takes a significant step towards a robust online payment system, the National Payment Gateway holds the promise of fostering financial inclusion, empowering merchants, and driving the growth of e-commerce in the country.
The collaboration between regulatory bodies, EthSwitch, and financial institutions sets the stage for a transformative era in Ethiopia’s digital financial ecosystem.
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