ETHIOPIA: EthSwitch woos tele birr into digital interoperability

Upon launching the newly built platform that interfaces interoperability of wallet, mobile, and internet banking, EthSwitch told The Reporter that negotiation is underway to bring tele birr on board.

The National Bank of Ethiopia (NBE) authorized the operation on October 26, 2021, after testing the integration, which Ethswitch has been working on for one year. Basically, any banking integration in Ethiopia commences after obtaining approval from INSA too.

EthSwitch’s newly launched interoperability enables 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. Customers of banks, MFIs and e-money issuers with digital wallet, mobile and internet banking and accounts now can send funds from one institution to another.

A client who has mobile money account can now access others. During the pilot project EthSwitch undertook for the past one year, nine banks and one MFI participated, executing over 125,000 transactions worth 1.1 billion birr. More banks, MFIs, and digital wallet providers are on their way to complete their technical integrations and testing.

NBE’s directive mandates any integration of wallet, mobile and internet banking, only through EthSwitch. In fact, it requires more than 80 interfaces, if wallet, mobile and internet banking operators prefer to interface individually. But EthSwitch can simply interface all of them with single central switch.

“Currently, other banks and MFIs are integrating on the platform. Foreign mobile money operators in the pipeline, including Safaricom, will also integrate. We are discussing with tele birr. As of now, it is difficult to transfer from telebirr to CBE birr or others. But once they come onboard, all operators will be accessible with one account,” elaborates Nebiyou Mengistu, Chief Operations Officer (COO) at EthSwitch S.C, which was established by all banks.

EthSwitch previously integrated ATM and POS, significantly scaling up card use. The Digital Wallet, Mobile and Internet banking interoperability, technically termed as interbank Person to Person (P2P) account transfer, is a significant step in achieving EthSwitch’s primary goals of attaining complete interoperability.  

The new platform charges service charge and processor fee. The service charge goes to banks to compensate their loss of deposit, which the digital operators used for transfer. For instance, if a Zemen bank client uses CBE’s deposit to pay for utility through mobile money, the platform compensates CBE, by paying the service charge to CBE. The processor’s fee goes to EthSwitch.

EthSwitch developed the new platform on its existing Virtual Private Network. But currently, it is planning to rent robust network infrastructure from ethio telecom in a bid to enhance its new project on real-time payment processing capability.

Digital Banking Interoperability is a significant step in the modernization of Ethiopia’s financial industry. The move is also hoped to shift NBE’s bank policy from bricks-and-mortar to digital financial system.

“As a result of Interbank P2P account Interoperability, the market share of electronic transactions both for transfer & payments will increase leading to rise in the amount of money flowing through the formal sector, benefiting the financial industry’s effort in resource mobilization,” remarked Yilebes Addis, Ethswitch CEO.

Contributed by Ashenafi Endale / The Reporter