Central Bank officials have drafted a sweeping digital payment strategy, mandating that payment providers disclose, through the simple text-based mobile interface, a.k.a USSD, all fees and slashing charges for low-value and peer-to-peer transfers.

Unveiled last week, a draft strategy on the national digital payment regime opened the door to public input on lower transaction costs, stronger safeguards, and more widespread digital account use. The authors of the draft see the plan as a step in moving the country away from cash, identifying affordability as the key barrier holding back millions from making digital payments part of daily life. Hidden costs and steep transaction fees have made basic mobile payments an unattractive alternative to currency notes.

“Transaction costs are mounting, and everybody is crying," Solomon Desta, Central Bank's vice governor, said. "We need to work hard in this regard.”

Although the country boasts over 280 million bank accounts, nearly triple its population, most remain dormant, while digital adoption is growing by 22pc, lagging not for lack of technology but for want of affordability, trust, and utility. In a bid to rein in the chaos, the National Bank of Ethiopia (NBE) is racing to digitise an economy still wedded to cash. But the latest strategy presented monetary authorities with a dilemma, realising that access is no longer the problem but usage.

The price of a smartphone is also out of reach for many, making it harder to spread digital payments beyond urban centres.

Policymakers say the problem is the price of going cashless. Across cities and towns, small shopkeepers and café owners complain about hidden charges and steep fees on mobile transfers, leading many families to stick with cash. Monetary policy officials are also pressing for a “cost of cash study” to measure the full economic burden of handling physical currency, from printing and moving to storing and securing cash, compared with the operational costs of digital alternatives. They believe the findings will guide the new strategy in the making and help justify difficult reforms.

The strategy comes after years of rapid expansion in digital accounts and a surge in the value of digital transactions. But officials admit that growth in access has not delivered broad adoption. Their strategy’s focus is not only on opening accounts, but on keeping them active.

Small business owners and market vendors still prefer cash, not out of tradition but because digital platforms are seen as too expensive and too opaque. Cash remains king for most Ethiopians, with the share of daily transactions at 95pc this year, second only to Myanmar. Many have never heard of Automated Clearing House (ACH) transfers, a low-cost tool that moves money directly between accounts, and even those who have are wary of fees and complexity.

The draft strategy will oblige payment providers to display an “ACH Pay” option on their platforms and publish open ACH application programming interfaces, allowing businesses to automate bulk payments for payroll and supplier bills. The goal is to cut costs and reduce dependence on manual payment processes.

Government services are also being pulled into the digital fold. The plan mandates that all government-operated transport services, from city buses to national railways, migrate to digital fare systems. In Addis Abeba, electric city buses now accept reusable payment cards, while the mobile money platform, Telebirr, has begun handling city transport payments, making phone-based payments routine.

The strategy extends its vision to cross-border payments. Officials hope to streamline transactions for tourists and members of the diaspora by linking Ethiopian digital payment systems, such as EthQR, to platforms in major visitor countries, enabling cross-border QR scans and digital transfers.

The strategy in the making introduces new rules that allow licensed platforms to operate escrow accounts with banks, aligns online payouts with return policies, and strengthens anti-fraud controls. Platforms such as Zemen Gebeya and Telebirr’s e-commerce arm serve as trustees for buyers and sellers, but the market still runs largely on informal trust. Cash-on-delivery dominates sites like Gojo Shop. Consumers report losses after paying in advance, while merchants struggle to recover payment after sales, fuelling public scepticism about transactions on digital platforms.

The draft strategy foresees a "Fair Access Directive" requiring mobile network operators to make their infrastructure data, USSD channels, and APIs available to all licensed financial service providers. The intention is to stimulate competition, lower barriers for new players, and extend digital services to underserved regions.

Banks are feeling the squeeze of these changes. Non-interest income from transaction fees and service charges has become more critical as lending faces tighter limits and rising risk. For Ermiyas Tefera, president of Berhan Bank, the Central Bank’s credit cap has pushed banks to become more competitive in attracting deposits.

“Initial investments and partnerships are expensive and contribute to higher transaction fees,” Ermiyas told Fortune. "Customers remain sensitive to service charges, which slows digital adoption. It may not affect us that much if the fees decrease.”

Ermiyas also credited mobile money operators such as Telebirr for taking risks that banks are reluctant to assume.

“Nobody denied us on transfer limits,” he said. “But it's hard to take the risks.”

The digital boom has brought new threats. Fraud losses hit 1.3 billion Br in 2024, mainly from social engineering scams that exploit low digital literacy. In the first half of the current fiscal year, 4,623 attempted cyberattacks on public and private organisations were recorded, a 115pc increase over the same period in 2023.