Regulators at the National Bank of Ethiopia (NBE) have ordered digital remittance platforms working with the Bank of Abyssinia (BoA) cease operations. Earlier this month, a letter compelled the Bank to stop using the CashGo and MamaPays platforms for remittance services.

The Foreign Exchange Monitoring & Reserve Management of the National Bank summoned Abyssinia to clarify the legality of the remittance operations through the apps and what distinguishes them from traditional money transfer services.

CashGo is a digital remittance services platform provided to Abyssinia Bank by Sol-Get Travel a year ago. The app has been integrated with Visa and Mastercard to allow people abroad to transfer funds directly to accounts with Abyssinia, deposited in Birr. It also offers a feature for raising donations to various organisations listed on the platform.

The app has been active for half a year and has been facilitating a daily transfer of 50,000 dollars, according to Tewodros Shiferaw, a co-founder.

CashGo is thus far not taking commission fees, a departure from traditional remittance services that can charge as much as 12pc.

Regulators at the central bank say neither Abyssinia nor the tech firms and payment companies hold valid permits to offer remittance services through the app. They contend a 'representative' can only engage in remittance services partnering with a fintech company holding an international remittance service provider license. The requirement is outlined in a directive issued last year, which defines representatives as banks, the postal service, payment instrument issuers or other financial institutions granted the status by the central bank.

"I expected the central bank to recognise our contribution instead of proscribing us," said Tewodros.

Tewodros claims the operations do not violate the directive as Abyssinia holds a remittance license, and CashGo is a technology provider, not a fintech company.

In traditional remittance services, banks serve as agents to service providers registered. Nonetheless, Tewodros says it is impossible to shut down the CashGo system immediately as ongoing payments have yet to be settled. Abyssinia Bank has requested five days to clear payments in the process.

Central bank officials have consented, according to him. The deadline has been moved to Monday.

The Commercial Bank of Ethiopia (CBE) had also agreed to partner with CashGo, but the services have since been paused. Executives from the CBE and BoA met with regulators last week, briefing the latter on the application's functionality. However, a decision was not made on the future of the platforms.

The other platform in jeopardy is MamaPays, an app developed by BelCash and launched in tandem with Bank of Abyssinia's e-commerce gateway. It allows receivers to request payments from senders. Users can connect to their accounts with Abyssina and Somali Microfinance. When a user requests payment, the app automatically generates a link through which the sender can settle. Senders can use Visa and Mastercard.