FEATURE
How BPC and EthSwitch are interconnecting Ethiopian banks
National Bank of Ethiopia in 2009 instructed all banks to cooperate in establishment of national switch system .
In May this year , BPC Banking Technologies and EthSwitch of Ethiopia announced that 18 banks in Ethiopia have been interconnected for inter-bank transactions . The key technology platform that has facilitated this interoperability is SmartVista from BPC . With this implementation 1,500 ATMS , 13,000 + POS-terminals , and 2.5 million cardholders in Ethiopia are interconnected .
“ SmartVista is a brand name and the flagship product . It is a suite of products and it is modular . Depending on the needs we tailor the solution for customers ,” explains Angelo Bertini , Managing Director , Spain , Middle East , North & West Africa , BPC Banking Technologies . The SmartVista portfolio covers switch , digital banking , e-commerce , merchant management , card and wallet management , ATM management , and fraud prevention .
In 2009 , the National Bank of Ethiopia instructed all commercial banks to cooperate in the establishment of the central and national switch system focused on electronic retail payments . Creating interoperability amongst the payment systems and expanding access to financial services was the objective of the National Bank ’ s instruction .
EthSwitch is the owner and operator of the national electronic retail payments switch of Ethiopia , National e-Payment Switch . This has been legally established with the purpose of providing electronic retail payment switching and clearing , card issuance and management , and infrastructure services in country at large . In November 2011 , the National Bank of Ethiopia became an EthSwitch shareholder and board member . In addition , 18 Ethiopian banks are also shareholders in EthSwitch .
The National e-Payment Switch is one of the four major components of the National Payment Systems strategy being implemented by the National Bank of Ethiopia , in which modernisation is at the core .
The National Payment Systems strategy includes the following four components :
• Real Time Gross Settlement System
• Automated Clearing House
• National Switch
• Central Security Depository
“ EthSwitch is independent of the Ethiopian central bank and is not an extension of the central bank . EthSwitch is part of the national payment systems strategy and our strategy is based on the national payment strategy ,” states Bizuneh Bekele , CEO EthSwitch .
The Ethiopian central bank is the central settlement bank of all the Ethiopian banks . For this purpose it has implemented the Real Time Gross Settlement System . The National e-payment Switch managed by EthSwitch is integrated online with the Real Time Gross Settlement System .
“ Everything is automated between us . The settlement is done on the accounts held by the central bank between the banks , on which we send our net settlement instruction .”
Bikele continues , “ Our technology strategy is not driven by central bank . The national payment strategy sets policy and strategic guidelines . Financial inclusion is one of its policy and strategic objectives . We share the financial inclusion agenda of the country . By integrating all the banks into one network the access to financial services is expanded and it is easier to expand to the rural population .”
EthSwitch is the sole clearing house for interbank electronic retail payments in Ethiopia . On an ongoing basis , it does settlement between the banks . Whenever there is an inter-bank transaction , the transaction will come to the EthSwtitch infrastructure and will be completed within its infrastructure . “ We process interbank transactions .”
If an ATM card of one bank is used in another bank ’ s ATM machine , payment is made immediately to the card holder on behalf of the card holders bank , on the spot . But clearing is an automated multilateral netting process with result of Net Settlement Instruction happening in the EthSwtich infrastructure . On the next business day , claims are settled between the banks passing through Net Settlement Instruction directly to Real Time Gross Settlement System through an automated and secured process .
If it is an intra-bank transaction , that is a person is using a bank ’ s card in the bank ’ s own ATM machine , the transaction will not come to the EthSwitch infrastructure . But even for inter-bank transactions , each bank is keeping their own data and there
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