National Digital Payment Strategy of Ethiopia (NDPS) is an ambitious plan spearheaded by the National Bank of Ethiopia (NBE) to overhaul the country’s payment system and create a digital economy. It’s a bold step toward reducing reliance on cash and ensuring that all Ethiopians, especially those in rural or underserved areas, can participate in the digital financial ecosystem.

Ethiopia wants to create a network that seamlessly connects banks, microfinance institutions (MFIs), fintech companies, and telecom operators bringing together all players in the financial space. A major part of this is the National Payment Gateway (NPG), which enables secure, cross-platform transactions and ensures that digital payments work smoothly across the entire country.

The goal here is to make digital payments a reality for all Ethiopians, from urban centers to rural villages. The strategy focuses on digitizing common payment flows things like government disbursements, social protections (like subsidies or payments for the poor), agricultural transactions, and even international remittances. This is particularly important in a country like Ethiopia, where many people still rely heavily on cash, especially in remote areas.

A big part of the NDPS is creating a strong regulatory framework that keeps digital payments safe and transparent. The National Bank of Ethiopia is working on making sure that all financial technologies are regulated in a way that ensures efficiency, fairness, and consumer protection. They are also developing rules that can apply to both old and emerging technologies, so the system remains flexible as things evolve.

Another strategy is creating an environment where new fintech startups, mobile network operators, and other innovators can thrive. The idea is to build a competitive and diverse digital payment ecosystem, where new players can introduce fresh services, and existing institutions can collaborate to push for innovation.

Progress with the National Payment Gateway (NPG)

In November 2023, EthSwitch Ethiopia’s national switch finished its pilot testing of the National Payment Gateway (NPG), and the focus is now shifting toward full commercialization.

After a successful trial, the NPG is now transitioning into full-scale commercial operations.

The plan:

• Secure way for businesses to accept online payments.
• Useful for subscriptions and utility bills.
• Helps simplify bulk transactions, such as government-to-person payments.
• Integrating with Other Digital Initiatives

The NPG is also going to integrate with other digital projects in Ethiopia, such as the Instant Payment System (IPS) for real-time settlements, and QR code standards that enable merchants to accept payments from multiple platforms using one QR code.

This commercialization phase is critical in making Ethiopia’s digital payment infrastructure more robust.

Challenges to Ethiopia’s Digital Payment Transformation

Although there’s a lot of momentum, there are still several hurdles to tackle.

Infrastructure and Access Barriers

While Ethiopia is expanding its connectivity, many rural areas still face challenges like poor mobile network coverage and electricity shortages, which can disrupt digital payments. The cost of smartphones is also a major barrier, as many people in rural areas still use basic feature phones.

Lack of Trust

Moreover, there’s a significant trust issue due to concerns over fraud, system downtimes, security risks, and fear from complete control which makes it hard for people to fully embrace digital payments.

For nowEthiopia remains a largely cash-dependent economy. Cash is king in many communities, and convincing merchants to adopt digital payments is still an uphill battle. On top of that, the country needs stronger cybersecurity measures and consumer protection laws to safeguard digital users.

Recent Achievements in Ethiopia’s Digital Payments

Despite the challenges, Ethiopia is making huge strides in digital payments. Some recent milestones show impressive progress:

• The Cash-Lite Tipping Point
• In the fiscal year 2024/25, Person-to-Person (P2P) transfers outpaced traditional ATM cash withdrawals in terms of transaction volume and value:
• P2P transactions: 128 million, worth nearly 578 billion Birr (a 158% increase from the previous year).
• ATM withdrawals: Less than 120 million, worth 156 billion Birr.

Mobile money is skyrocketing. From almost nothing in 2020, the total number of mobile money users had surged to over 60 million by early 2025, and digital accounts (mobile banking, internet banking, debit cards) reached 205.8 million by mid-2024.

By mid-2025, digital micro-credit has disbursed 24.5 billion Birr to 11 million borrowers, helping people in rural areas and underserved communities gain access to financial resources.

The Battle Between Telebirr and M-Pesa

One of the most exciting developments in Ethiopia’s mobile payments landscape is the rise of Telebirr and M-Pesa, two platforms that are driving competition and innovation in the mobile money sector.

Telebirr: Launched by Ethio Telecom in 2021, Telebirr quickly became the dominant mobile money service in Ethiopia, with over 51.5 million subscribers. The Ethiopian government also mandates using Telebirr for certain payments, like fuel and traffic fines, which has boosted adoption.

M-Pesa: Safaricom’s M-Pesa entered the Ethiopian market in 2023 and is shaking things up with its rapid growth. By 2024, it had amassed 4.5 million subscribers, and it’s expanding into areas like digital lending and savings, which makes it a real competitor to Telebirr.

The competition between these two players is helping expand access to financial services across the country rapidly.

Fayda Digital ID in Financial Inclusion

Fayda Digital ID is another cornerstone of Ethiopia’s digital payments system. This ID system is essential for ensuring that everyone, especially marginalized groups like women and rural populations, can access financial services.

By 2026, Fayda ID will be required for all banking transactions, simplifying account opening and making it easier for underserved populations to access financial services.

The Fayda ID integrates with both Telebirr and M-Pesa for Know-Your-Customer (KYC) compliance, streamlining digital services like loans, savings, and other financial products.

Ethiopia’s Digital Finance Future

Ethiopia’s digital payment ecosystem is evolving rapidly, but the country still has work to do to overcome infrastructure, trust, and cultural barriers. With the continued rollout of the National Payment Gateway, the rise of Telebirr and M-Pesa, and the introduction of Fayda Digital ID, Ethiopia is on its way to achieving a more inclusive, digital, and cash-lite economy. However, overcoming remaining challenges like infrastructure gaps and financial literacy will be key to ensuring that all Ethiopians can benefit from this digital revolution.

This transformation is exciting, but it’s important to recognize that the road ahead will require both continued innovation and significant efforts to ensure everyone can participate in Ethiopia’s evolving digital economy if they want to. The success of these initiatives will depend on how well these challenges are addressed while maintaining a secure, inclusive, and sustainable financial ecosystem.

After all The people are judge, jury and executioner.