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Arifpay Opens Door for Ethiopian Fintechs to Join EthSwitch’s Payment Ecosystem — Here’s How

April 15, 2023

Arifpay Financial Technologies, the first private payment system operator in Ethiopia, has announced its integration with EthSwitch, the national switch operator, in a move that is set to transform the Ethiopian fintech ecosystem. The joint press conference held recently, highlighted the numerous benefits that this integration would bring to customers, merchants, and banks alike. These benefits include increased financial inclusion, improved payment efficiency, enhanced interconnectivity, support for small businesses, and increased job opportunities.

Some of the concrete significance of this integration for Arifpay and the Ethiopian fintech ecosystem are:

Increased Financial Inclusion: The integration of Arifpay with EthSwitch will create an interoperable payment system that allows users to make transactions across different payment platforms, leading to increased financial inclusion for unbanked and underbanked populations.
Improved Payment Efficiency: The integration will streamline payment processing and reduce transaction times, leading to improved payment efficiency, reduced transaction costs, and increased customer satisfaction.
Support for Small Businesses: Small businesses in Ethiopia will benefit from the integration, as they will have access to a range of payment options and increased opportunities to transact and grow their businesses.
Enhanced Interconnectivity: The integration of Arifpay with EthSwitch will create a seamless payment ecosystem that connects all payment platforms in Ethiopia, leading to enhanced interconnectivity and a more robust fintech ecosystem.

Yilebes Addis, CEO of EthSwitch, emphasized the company’s commitment to promoting financial inclusion and digital payments in Ethiopia through the integration of Arifpay with EthSwitch. Bernard Laurendeau, CEO of Arifpay, highlighted the introduction of interoperable ArifPOS Smart devices, which will give consumers more payment options beyond debit cards.

Arifpay’s entry into EthSwitch’s national payment ecosystem is a significant milestone, as it paves the way for other private payment startups to integrate with the national payment infrastructure and drive the growth of the Ethiopian economy. Arifpay’s payment solutions for smartphone, POS, and quick response have been gaining popularity since the company received a commercial license from the National Bank of Ethiopia to commence POS operation and payment gateway services.

Barely One Month After Launch, Ethiopian Fintech Startup ArifPay Raises $3.5m

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Barely One Month After Launch, Ethiopian Fintech Startup ArifPay Raises $3.5m

March 21, 2021

ArifPay, a fintech company based in Bole (Addis Ababa) Ethiopia, has raised $3.5 million (140 million ETB) in a private placement round from 31 investors. The paid capital is $1 million, while the remaining $2.5 million is subscribed capital. Investors are required to pay the subscribed money over a two-year term.

“Never thought raising $3.5M in Ethiopia was possible. This is a proof that anything is possible as long as you surround yourself with visionaries who share your dream. This is a result of team work. Thank you for all shareholders and board of directors for believing in us,” said ArifPay founder and chief executive officer (CEO), Habtamu Tadesse.

Here Is What You Need To Know

AirPay sold 140,000 shares to 31 investors, each worth 1000 ETB ($24.23). The stock was sold on the open market. However, this was a private placement rather than a public offering.

Since the National Bank of Ethiopia, the country’s apex bank, does not allow non-Ethiopian foreign citizens to invest in Ethiopia’s financial sector, all investors are Ethiopians or Ethiopian Born Foreign Nationals.

A Look At What ArifPay Does

Founded on February 26 this year by Habtamu Tadesse, former founder of Zay Ride (which is one of the pioneer ride-hailing platforms in Ethiopia), ArifPay is a mobile point of sale system which will allow ATM cardholders to make electronic transactions via their smartphones.

M-pos and gateway-related digital financial items are among the company’s plans. Its aim is to allow people to perform financial transactions, such as payments, using their mobile phones.

The National Bank of Ethiopia is currently processing ArifPay’s application for a Payment System Operator License (for POS and Online gateway business). By the end of May 2021, Arifpay plans to have its services up and running.

“Once operational, ArifPay aspires to make a significant contribution to the financial sector by offering digital-based payments services that meet the needs of consumers and merchants towards cash-lite transactions in line with the national agenda of the digital economy,” said Tadesse.

Foreign (Non-Ethiopian) Investors Are Barred From Participating In Ethiopia’s Fintechs

The fact that no foreign non-Ethiopian investors participated in ArifPay’s latest round of investment Ethiopia lies in the fact that the East African country (which is Africa’s second most populated country after Nigeria) continues to place a bar on foreigners owning stakes in banking, insurance, brokerage services, and legal consultancy businesses.

In October 2020, after series of negotiations and deliberations, the National Bank of Ethiopia (NBE), finally granted a license to state-owned telecoms company, Ethio Telecom, to start mobile money service in the country. This followed the issuance, in April 2020 by the bank, of a regulation called Licensing & Authorization of Payment Instrument Issuers. For the first time in Ethiopia’s history, the regulation allowed mobile money transactions. However, there is a caveat: any company interested in the new financial service regime must set up a trust account with a deposit money bank in Ethiopia.

“As part of the application process,” the directive read, in parts, “the National Bank, may request for a preliminary meeting and demonstration of the intended payment instrument to be issued, its related services, products as well as operation. Based on requests made and written approval of the National Bank, a payment instrument issuer may be allowed to provide cash-in and cash-out; local money transfers including domestic remittances, load to card or bank account, transfer to card or bank account; domestic payments including purchase from physical merchants, bill payments; over-the-counter transactions; and inward international remittances services.”

The regulation has also opened up the country’s financial services sector to include that a licensed payment instrument issuer may, with the relevant agreement with regulated financial institutions and pension funds, be allowed to provide micro-saving products; micro-credit products; micro-insurance products; or pension products in the country.

The National Bank of Ethiopia also issued, that same year, a “Licensing and Authorisation of Payment System Operators Directive (ONPS/02/2020), allowing financial technology companies (fintechs) to start off payment processing and related services in Ethiopia.

Five licenses under the payment system operator directive include National Switch, Switch Operator, ATM Operator, POS Operator, and payment gateway license.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

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