EthSwitch finalizes to start new expansion projects

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EthSwitch is under the final stage to commence new projects to expand real time retail payment project under three digital platforms.
The company that was formed by financial firms in the country about a decade ago and which introduced its national switch service in 2015 said that it will announce the commencement of core instant payment switch, payment gateway, and shared wallet and digital channels projects that will be operational in different three lots and timeframe.
Abel Tadele, Director of Program Management Office at EthSwitch, told Capital that the initial project that will go live in the near future is a payment gateway and will be followed by a core instant payment switch.
He said that the company has been undertaking several works to boost its capacity to the level that developed or developing countries are using in the modern payment system.
With regards to the process, the real time retail payment system is in the process to be launched in three lots.
At the initial stage EthSwitch has issued expression of interest that attracted about 54 global companies and followed by request for proposal (RFP) responded by 31 companies.
“From the evaluation on the RFP we have shortlisted 18 international companies including the global giants in the ecosystem to compete,” Abel explained.
For the first lot and second lot similarly six companies and four companies for third lot have provided their responses to execute the projects.
“Our evaluation committee has now finalized the technical and financial evaluation and it is currently on the stage of negotiation and contracting,” he added.
For the first lot, core instant payment switch, companies like HPS and BPC AG have reached as finalist, while in the second lot that is payment gateway, it attracted well-known companies in the digital payment ecosystem like HPS, FSS and BPC.
Similarly, the finalists for the third lot are Panamax, BPC, HPS and FSS, “we will disclose the details when the awarding process closes,” Abel added.
Currently, in relation to the reform at the National Bank of Ethiopia (NBE), financial industry regulatory body, on the payment system interoperability has become crucial since non bank institutions are allowed to involve on the system, “interoperable is required for nontraditional banks, who may use different source of channels and technologies like mobile payment, web or app besides the traditional bank account and card systems.”
Abel said that besides that interoperability is vital for payment system for ecommerce that demands payment on online environment.
“In this regard the payment gateway receives priority and will be applied at the first stage of the coming project implementation,” he explained.
The scheme will benefit different stakeholders like participants to access the online payment platform for payment.
The payment gateway would have also directory service in different models that benefits users to conduct payment by alias.
“The payment gateway will be introduced in the coming few months and will expand through time,” the Program Management Office Director said.
It would be a breakthrough for the digital payment industry that benefits not only traditional banking system but others of new entrants on the payment system.
The first lot, core instant payment switch that was put on the second stage as a priority but is implemented in parallel with the second lot will expand to mobile based payments.
Core instant payment switch shall ease the peer to peer payment system between banks that is currently piloted under the existing system.
Abel said that it is also designed to conduct swift or instant payments clearing from account to account immediately between customers.
“It may initiate from different channels like mobile or internet that also supports services like bulk disbursement. For example Ministry of Finance can conduct pension payments or payment for beneficiaries under productive safety net program from a single source to different accounts and that may use different financial firms and it will help for wage disbursement in the future,” he explained.
It has also different schemes like API (application programming interface) management layer, shared fraud management, disputed management module and other functional attributes.
“The two lots that have interlinks would allow to provide services on ultra low cost and encourage for the growth of digital payment usage,” Abel explained the benefit of the coming new technologies by adding that the shared wallet and digital channels platform that is included in the third lot will provide an omni channel service that would ease the unnecessary cost of financial firms spending to install this technology.
“Since it is a shared platform EthSwitch will install, it will be affordable for financial firms to avail with reasonable rate,” he added.
“So far as a priority the market is demanding the payment gateway due to that it will be expected to be seen in the coming six months under a first phase of implementation and other two phases of the payment gateway will be emplaced in another six months times respectably,” Fikru Woldetensay, Director for Marketing and Innovation of EthSwitch, told Capital.
“The first lot will be also running in similar period, while the third lot will be implemented in the near future as next move,” he added.
Fikru said that the major target of EthSwitch is to provide modern schemes on the digital payment integration for financial industry, “we want to investment on financial inclusion technologies to easy the burden of financial firms that is why we are introducing these three new projects.”
“Access to finance in the country is low compared with peers the investment is also very high for expansion. For instance deploying a single ATM it may cost thousands of dollars and hundreds of dollar for POS but the integration that Eth Switch done and the coming of these new platforms will minimize the financial firms’ investment and share their burdens with insignificant service charge,” Marketing and Innovation Director explained.
He said that the new scheme will contribute for financial firms to satisfy customer and build confidence.
According to the two leaders, the project in the three lots may cost up to eight million dollar at pre implementation period, but it is early to mention given amount since it is on negotiation stages.
For over five years EthSwitch has enabled to manage all ATMs under interoperable, and since last year using POS terminals operated by all banks.
Ethswitch, established in 2011, is a share company fully owned by all banks in Ethiopia. It is established mainly to provide simple, affordable, secured, and efficient e-payment infrastructure services to retail payment service providers, and through them, to end users in Ethiopia; by deploying technology.
Ethswitch is one of the two national switches in Africa that Yilebes Addis, CEO of EthSwitch recently says it has enable to cut unnecessary charges that may be occurred if the country uses foreign payment systems for its domestic payment solution.
The CEO explained that over 26.5 million numbers of transactions that have 28 percent increment compared with the preceding year have registered, while ATM cash withdrawal takes the 80 percent.
“POS interoperable has registered significant performance despite being new. In terms of profit it achieved 115 percent compared with the projection,” he added.
EthSwitch, which is expected to provide service for payment system operators and payment instrument issuers when they are getting a green light from N4BE, has a subscribed capital of 900 million birr.
So far information indicated that excluding the traditional banks about 12 system operators and four issuers are on the pipeline to be operational as per the NBE directive that was issued recently under the way to financial inclusion and digital payment strategy.