The apex bank of Ethiopia, National Bank of Ethiopia (NBE), has announced a directive mandating all payment service providers (PSP) to adopt standardized and unified QR code systems for digital payments.
In other words, NBE released a directive’s statement on X, formerly Twitter, that all payment service providers in Ethiopia must provide a QR codes that align with the apex bank’s standard for merchants to collect payments from their customers.
The unified QR code systems will allows merchants to accept payments from any bank or payment service provider with a single QR code. That’s to say, customers can pay merchants from any bank account scanning the standardized QR code. With this, transactions are much easier and digital payment adoption in the country is encouraged.
This unified and standardized NBE’s QR code is a unique, single and interoperable payment protection. It’ll be used to replace the various QR code systems currently in use in the country. According to NBE, it will be effective starting from 01 December, 2024.
Ethiopia’s Big Move to Cashless Payment
The National Bank of Ethiopia (NBE)’s new QR code standardization initiative is a key step in the country’s National Digital Payment Strategy (NDPS) which was initiated to accelerate Ethiopia’s shift toward a cashless economy.
By introducing an interoperable QR code system, the initiative aims to enhance financial inclusion by providing a simplified, unified and universally accepted digital payment method that benefits both merchants and consumers.
This unification will replace the current mix of payment QR codes, requiring all providers to follow NBE’s guidelines, which ensures consistency and security across transactions.
More so, NBE explained that standardizing QR codes will help to develop trust and reliability in digital payments which makes it easier for merchants of various types to accept cashless payments and for consumers to transact seamlessly across different platforms.
How the Standardized QR Code will Work
The standardized QR code system will function through a centralized infrastructure managed by EthSwitch, the national switch, which operates under the guidance and oversight of the National Bank of Ethiopia (NBE).
This infrastructure enables QR code interoperability, meaning a single QR code can be used seamlessly across any payment app or provider that complies with NBE’s standards.
So, when a customer scans a merchant’s QR code at a store, the payment will be processed through EthSwitch’s system, allowing the transaction to go through regardless of the customer’s or merchant’s bank or payment provider.
While this interoperable QR code system will foster a unified cashless economy in Ethiopia rural internet limitations present a great challenges as the system would required an internet connection to process any payment.
Regardless of the challenges, the EthSwitch and NBE’s collaborative oversight aims to build a robust system that could elevate Ethiopia as a leader in digital payment innovation across Africa.
