Thursday, June 13, 2024

EthSwitch receives grant to transform Ethiopia’s digital payment landscape


The national switch, EthSwitch which is undertaking a facility of massive technology based financial activities through its platform receives USD 8.34 million in the form of a grant to realize its upcoming grand project.
The statement which EthSwitch sent to Capital indicated that the funding from Bill and Melinda Gates Foundation was secured for the expansion of its digital payment system.
The company disclosed that the grant will be part of an investment required for the implementation of a national real-time interoperable payment platform that aims to fundamentally transform Ethiopia’s digital payment landscape.
Moreover, this project is set to accelerate the implementation of the national digital payment strategy and drive financial inclusion in Ethiopia. The project enables EthSwitch to provide instant payment, payment gateway and shared wallet services to digital finance and payment services providers.
In March 2021, EthSwitch also received a grant of USD 2.33 million from the African Development Bank’s Africa Digital Financial Inclusion Facility (ADFI) for the same project in a competitive process. The grants from both Development partners, totaling USD 10.67 will go into one pool for the implementation of the same project as part of the over USD 15 million investment required for the project implementation. The remaining cost of the project will be covered by EthSwitch in the form of administrative and overhead expenses.
Haddis Tadesse, Country Director of Bill and Melinda Gates Foundation says, “Bill and Melinda Gates Foundation is committed to support the Government of Ethiopia with its national financial inclusion agenda. Through this grant, the foundation aims to support EthSwitch in its effort to avail an inclusive payment scheme that will unlock all use cases across multiple payment instruments and channels, including government to people payment programs to reach last-mile communities.”
Yilebes Addis, EthSwitch CEO, expressed his appreciation to the Gates Foundation for the generous support and those who contributed in facilitating the grant, including EthSwitch’s Board of Directors, the management team, Program Management Office and staff.
The new EthSwitch’s project will provide interoperability services across all payment instruments, and enable digital financial service providers to drive usage through low interchange fees incentives and shared services that reduce the business setup cost.
Furthermore, it will allow all digital financial service providers (including non-banks), bill aggregators, government agencies and others to participate, guaranteeing an open-loop payment scheme.
EthSwitch CEO said, “The Real-time Retail Payments Platform Project is a grand project that will create widespread access to digital financial services through shared wallet platform that will enable microfinance institutions and other digital wallet service providers to use it in ‘white Label’ arrangement without investing in the technology.”
Yilebes elaborated that it will also help advance Ethiopia’s e-commerce sector by providing easy to integrate payment gateway, “Furthermore, it will incentivize merchants and payment service providers with instant settlement of payments, thereby encouraging more digital payment uptake, facilitating the exponential growth in digital payments market share.”
The Real-time Retail Payment Platform Project will be implemented over a two year period in phased approach, where the three components will go live at different milestones from as early as 2022. The Project will be implemented in close collaboration with project implementers, strategic industry experts and players. The project involves procurement of systems and hardware, and establishment of data a centre, and capacity building.
Late October, EthSwitch commercialized a Person to Person (P2P) platform after the success on the piloting period. The P2P enables customers of banks and MFIs and E-money issuers with digital wallet, mobile and internet banking and accounts to send funds from one institution to another. The interoperability includes transfers from bank account to bank account, wallet to wallet, wallet to bank account and from bank accounts to wallet using internet based and USSD channels as well as smart phone applications.
Previously, it had enabled to interoperable banks’ ATM and POS.
According to the date of the national switch only in October 2021, the interbank transaction through ATM cash withdrawal was over 4.5 million in volume and 4.73 billion birr in value. Similarly, the POS purchase in the stated one month only was 28,614 in volume with close to 62 million birr in value, while under the recently introduced P2P transfer about 482 million birr has been transferred with 45,886 transactions.
EthSwitch was formed by financial institutions and the National Bank of Ethiopia about a decade ago to provide a service for all financial institutions and payment operators in Ethiopia by providing channel interoperability, an institute domestic payment scheme and provide shared infrastructure/platforms.

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