Chapa Financial Technologies received a payment gateway operator license from the central bank three months ago. It is joining the financial sector with a workforce of 20.

A pioneering firm in financial technologies (Fintech) has launched an online gateway platform three months after securing a permit from the central bank.

Chapa Financial Technologies Plc made history by becoming the first non-bank company to offer payment gateway services, enabling businesses to accept local and international payment methods from anywhere in the world. Incorporated in 2020, Chapa joins the financial sector in partnership with close to a dozen local financial institutions and eight international payment facilitators.

The company developed crowdfunding platforms such as “My GERD” to raise money for the construction of Grand Ethiopian Renaissance Dam (GERD). The platform, created in collaboration with the Ethiopian Electric Power and the Ethiopian Diaspora Agency, has raised close to 300,000 dollars from nearly 2,000 donors.

Chapa Technologies launched its payment gateway operations with 20 employees and three advisors.

“We look forward to expanding our footprint on the digital ecosystem,” said Nael Hailemariam, co-founder and chief executive officer (CEO).

Nael holds an electronics and information engineering undergraduate degree from Beihung University in China. He completed a graduate data science and information technology program at Tsinghia University. Before returning to Ethiopia to found Chapa Technologies, he worked as an assistant lecturer and lab manager at the university.

Nael hopes to see Chapa - street vernacular for 100 Br notes - enrich customers’ experience, offer convenience and bring transaction costs down. Local businesses looking to accept payments through Chapa will pay 3.5pc of the transaction value as a service fee, while international merchants will be charged one percent.

Awash International Bank (AIB) has teamed up with Chapa Technologies. The company will provide a portal to facilitate payments through Awash Birr, a mobile wallet platform launched last year, disclosed Elias Shega, manager of mobile and international banking at Awash Bank.

Over 4,100 merchants accept payments through Awash Birr.

The Bank serves 6.8 million customers and has a paid-up capital of over 10 billion Br, making it Ethiopia’s largest private bank. Awash Bank was among the first to sign a partnership deal with the state-owned Ethio telecom when the latter became the first non-financial institution to be granted a payment instrument issuer license from the central bank last year.

Ethio telecom and Chapa are in the league of a handful of fintech firms that have secured permits from the National Bank of Ethiopia (NBE). The regulators issued an edict in 2020 that allows non-financial institutions to operate as payment instrument issuers and operators, ushering in a new era in the financial sector. Earlier this month, Ethio telecom introduced micro-loan, overdraft and micro-saving services on its mobile money platform and cemented its place as a full-fledged financial services company.

The central bank is reviewing the applications of three of the 13 fintech firms that have applied for permits to join as gateway operators or instrument issuers, a senior central bank official disclosed.

Kacha Digital Financial Services became the first fintech to launch a private mobile money platform.

The number of digital payment outlets is increasing rapidly with the emergence of non-financial operators and dozens of banks under formation, in addition to the existing 22 commercial banks.

Industry observers foresee the arrival of fintech companies will help boost e-commerce businesses, facilitating online payments and lowering costs.

“They provide a new payment option where merchants won’t be forced towards one-on-one integration with different banks,” said Tewodros Tassew, a financial technologies consultant.

The expert believes fintech can also help bolster foreign currency inflow and potentially play a role in addressing the forex shortages crippling almost all industries.

Payment gateway operators must register a paid-up capital of three million Birr. The threshold for point of sales (POS) operators stands at 10 million Br.

Incorporated with a paid-up capital of 140 million Br and 42 founding shareholders, ArifPay was the first private company to receive a nod from regulators last November to join the financial sector as a payment operator. Its executives plan to kick off services in the coming October. Last year, the company inked an agreement with Abay Bank to launch a mobile point of sales (mPOS) service to be implemented through smartphones or tablets, allowing bank account holders to make payments from ATM cards issued by any bank.

Another fintech company, Sunpay Solutions, a subsidiary of the Sunshine Investment Group, is also readying to start operations after securing a license last January as a POS and gateway operator.

“We’re preparing to launch,” said Gudayu Zenebe, the payment systems manager.

It was established two years ago with a paid-up capital of over 13 million Br. According to the CEO, the company has acquired 2,000 POS machines from China, which it plans to place at hotels, supermarkets, and gas stations.

PUBLISHED ON Aug 20,2022 [ VOL 23 , NO 1164]

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