EthSwitch, Ethiopia’s national payment switch, has reported significant growth in its financial performance and operations for the 2023/2024 fiscal year. The company recorded a 97 percent surge in profits, earning 1.06 billion Birr before taxes. This success is attributed to its expanding role in facilitating digital payments and supporting financial institutions across the country.
EthSwitch plays a vital role in Ethiopia’s digital payment ecosystem by enabling seamless transactions across financial institutions. During the fiscal year, it processed 94.5 million ATM transactions worth 123.2 billion Birr, a 32 percent increase from the previous year. The company also facilitated 2.18 million point-of-sale (POS) payments totaling 5.7 billion Birr, marking a 125 percent rise. Additionally, peer-to-peer (P2P) transfers grew significantly, with 49.69 million transactions worth 270.7 billion Birr, a 251percent increase from the previous year.
This financial milestone coincides with the successful completion of the fourth year of EthSwitch’s strategic master plan, which has significantly expanded digital financial services. To further boost its financial capacity and sustain its growth trajectory, the company issued new shares, raising its paid-up capital to 1.79 billion Birr.
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According to Nebiyu Mengistu, Chief Operation Officer at EthSwitch, the company’s business model thrives on transaction volume. As the number of transactions grows, so do its revenues. EthSwitch generates its primary income by collecting fees on ATM interoperability, point-of-sale (POS) interoperability, and peer-to-peer (P2P) transfers. It also offers additional services, such as card personalization for banks’ ATMs and POS systems, as well as financial accounting services for banking institutions.
Nebiyu says that key innovations have driven EthSwitch’s growth. One of its standout achievements was the implementation of the Instant Payment System (IPS), which facilitates rapid electronic money transfers between bank accounts. The IPS platform has enhanced the efficiency of Ethiopia’s digital payment landscape.
In May 2024, the company introduced the National Payment Gateway, which allows merchants to receive payments electronically, providing a much-needed boost to e-commerce in Ethiopia.
Nebiyu highlighted that EthSwitch provides real-time settlement visibility for banks, helping them manage liquidity more effectively. Currently, the company offers two real-time settlement windows daily and plans to increase this frequency in the future, further improving liquidity management for financial institutions.
Nebiyu says EthSwitch has also prioritized financial inclusion by developing innovative solutions for individuals without smartphones. The “Request to Pay” system allows users to complete digital transactions using their phone numbers or national ID card numbers, with a USSD code sent to confirm payments.
To enhance the efficiency of digital transactions, EthSwitch is working on the interoperability of QR codes for banks and other financial entities, says Nebiyu. Following a directive from the National Bank of Ethiopia, all financial transaction entities—including banks, microfinance institutions, and digital payment operators such as M-Pesa and Telebirr—are required to implement a standardized QR code system. EthSwitch is at the center of this initiative, developing an interoperable QR-based payment system to ensure compatibility across platforms.
The company is also planning to introduce an interoperable utility payment system, which will simplify the process of paying for essential services like electricity and water.
Nebiyu argues that EthSwitch is actively supporting the growth of e-commerce in Ethiopia through the National Payment Gateway, which enables merchants to receive electronic payments efficiently. In addition, the company has completed the trial phase of its Shared Wallet Platform and standardized the Ethiopay Dual Interface Card system, which allows quick and secure contactless payments.
The company earned over 1.13 billion Birr in operational revenue during the fiscal year.
However, it faces challenges such as unstable connectivity with financial institutions. To address this, EthSwitch is working to establish multiple backup links to maintain consistent communication, according to Nebiyu. Another major challenge is the shortage of skilled workers, which has limited the company’s human resources.
