Digital Payments Reshape Economy While Service Workers Lose Out

Sep 14 , 2025. By NAHOM AYELE ( FORTUNE STAFF WRITER )

Digital finance is transforming the way money moves. But whether it can preserve the small, human gestures tied to it remains uncertain. For many in the service industry, the challenge is not accepting progress, but to ensure that in the rush to a cashless future, the small notes of gratitude that once sustained them do not disappear, reports Nahom Ayele, Fortune Staff Writer

The way the Birr moves is changing, and with it, habits that have shaped daily life for generations. Digital payments are sweeping across the country, reaching millions of people and reshaping how they spend, save, and borrow. But for workers who once relied on small cash gestures of gratitude, the shift has transformed a culture as old as hospitality itself.

At the Radisson Blu Hotel, on Marshal Tito Road, Lidya Solomon, 24, has felt the change more than most. Nearly two years into her job, she recalled a time when guests would regularly pay their bills in cash and often leave a folded note for her at the table. She used to make up to 500 birr a day in tips.

“Even on quiet days, I could count on at least 100 Br,” she told Fortune.

Along with her salary and the hotel’s service charge, it made up a dependable supplement. Now, tips come less often and arrive much later. Digital transactions dominate, and while some guests still add a little extra, the money first goes into the company’s account. She and her colleagues wait months before seeing it. What once felt like a daily cushion is now a delayed bonus.

The same pattern plays out in less glamorous settings. At hair salons, where tipping is a custom, many customers now round off their payments to the exact service fee.

Richard Bryan, a stylist with eight years of experience, said cash encouraged more generous habits.

“People were quicker to leave a proper tip when it was in their pocket,” he said, working from Abiy Barber shop on Sierra Leone Road, near Lancha “With mobile banking, they rarely go beyond the bill.”

The shift is tightly connected to the rise of digital finance. A decade ago, only a small fraction of Ethiopians used mobile banking. Today, more than 22 million people are on mobile platforms, close to five million use internet banking, and debit cards are increasingly common. In cities like Addis Abeba, digital payments are the norm, prized for speed and convenience. For many service workers, though, the result is the loss of immediate tips.

Service employees across hotels, salons, and restaurants say the change is hurting incomes that are already stretched. Tesfaye Tsegaye, president of the Tourism, Hotel & General Service Workers’ Trade Union Federation, sees the issues as a symptom of deeper weaknesses in labour protections.

“Many workers in the hotel and service industries earn low wages,” he said. “Employers often claim that tips and service charges make up the difference, but workers continue to struggle.”

According to Tesfaye, cashless systems have only deepened the problem. Digital payments make it easier for customers to skip tipping altogether. He argued that the solution is not to cling to tips, but to push for better organisation and stronger worker protections.

“Workers must push for wage increases and stronger labour protections," he told Fortune. "Without unions, their bargaining power remains weak.”

The struggle is not limited to hotels and salons. On the streets of Addis Abeba, the same story unfolds for delivery riders like Ye'absira Abeba, a 23-year-old courier for the food delivery startup Bue. Tips are a crucial supplement to his fixed delivery fees, but he has noticed that mobile payments have thinned out this lifeline.

“People tip better when they pay in cash,” he said, resting beside his bicycle during a break.

What once felt like a reliable boost to his daily wages is now much less certain. Platforms like Telebirr, CBE Birr, and QR-based solutions have made transactions effortless for customers, but have come at the expense of informal earnings, such as tips.

“With mobile payments, they simply settle the order," said Ye'absira. "Tips have become rare.”

Digital finance itself has expanded at an astonishing speed. It began with the Automated Transfer System in 2011 and the national switch in 2014, but gained momentum when non-bank institutions were permitted to operate mobile money platforms four years ago. In 2021, Telebirr entered the market and quickly became the dominant player. Its reach is now enormous. By the end of last year, Telebirr had more than 51 million subscribers.

Across the country, 128.5 million mobile money accounts have been registered, with millions using them for loans and savings. In four years, Telebirr alone processed over 25 billion Br in microloans and savings, reaching households and businesses that banks once overlooked. Competition is fierce. Along with earlier players like M-Birr, CBE Birr, Amole, and HelloCash, the arrival of M-Pesa in 2023 brought a global heavyweight into the race. These services now underpin merchant payments, transfers, and credit, weaving a digital web that stretches far beyond the capital.

Annual transactions on digital platforms now surpass 18 trillion Br, more than triple the country’s total economic output. At the launch of FenanPay, a homegrown platform, officials pointed to this as proof of a financial revolution.

“The digital finance sector is changing rapidly,” said Solomon Damtew, director of Payment & Settlement at the National Bank of Ethiopia (NBE).

What was once the domain of banks now includes a host of fintech firms, opening new opportunities for consumers and businesses. But as Solomon also observed, much of the country still lives outside the reach of these systems.

Addis Abeba dominates the digital infrastructure. The city holds over half of 12,000 bank branches, nearly half the ATMs, and more than three-quarters of point-of-sale machines. While other regions have begun to catch up, digital usage outside the capital grew between 2013 and 2020. Still, large gaps remain in pastoral and remote areas due to limited infrastructure and weak network coverage. Millions remain excluded from cashless finance.

Urban centres, though, are adopting digital tools quickly. According to Nebiyu Taye, a digital marketing strategist and founder of Click Digital Solutions, integration is driving the change. He observed an increasing number of customers using mobile money and digital wallets in restaurants, retail stores, and service industries.

“Convenience, transparency, and efficiency are pulling people away from cash,” Nebiyu told Fortune.

There are unintended side effects. Some customers present falsified payment screenshots, a type of fraud that is difficult to detect right away. Others worry about privacy, since staff often request phone numbers to confirm payments. And, perhaps most importantly, the lack of built-in tipping options in digital apps has weakened a core tradition in the service industry.

“The culture of tipping has been disrupted,” Nebiyu said. “Digital systems make it less likely for customers to leave something extra.”

He believes the solution lies in innovation that keeps workers in mind, such as digital wallets assigned directly to staff or tipping features inside payment apps. Awareness campaigns could also encourage customers to maintain the habit. He attributed Telebirr’s merchant confirmation system, which avoids sharing personal numbers, to a user-friendly design that could spread across the sector.

“Digital finance has incredible potential to transform the economy,” Nebiyu said. “But for it to be sustainable, it should support workers, protect data, and preserve cultural practices like tipping.”

PUBLISHED ON Sep 14,2025 [ VOL 26 , NO 1324]