Addis Ababa, May 27, 2025 — The National Bank of Ethiopia (NBE) has introduced a sweeping amendment to its Licensing and Authorization of Payment Instrument Issuer Directive, issued as Directive No. ONPS/10/2025, aimed at modernizing the country’s digital payment landscape. The directive introduces new compliance mandates, operational standards, and interoperability requirements, signaling a bold step toward financial inclusion, consumer protection, and a robust digital economy.

Key Changes Introduced by the Directive

1. Higher Capital Threshold
   In a move to strengthen the financial capacity of payment instrument issuers, the minimum paid-up capital has been increased to 100 million Birr, to be deposited in cash with a commercial bank in Ethiopia. Existing license holders with capital below this threshold must comply by June 2027, while new applicants have a two-year compliance window post-licensing.
2. Mandatory Interoperability
   The directive mandates all mobile money operators to ensure wallet-to-wallet interoperability through the National Switch. This allows seamless fund transfers across different platforms, improving user convenience and enhancing competition among service providers.
3. Instant Payment System Participation
   All financial institutions offering digital payments are now required to integrate into the Ethiopian Instant Payment System (EIPS), allowing for real-time fund transfers and improved transaction efficiency across the sector.
4. Transaction and Balance Limits Updated
   For Level 2 electronic money accounts, the daily transaction limit has been raised to 300,000 Birr, with a maximum electronic balance of 150,000 Birr. Additionally, individual person-to-person transfer limits are capped at 75,000 Birr, and merchant payments via QR codes cannot exceed 250,000 Birr per day.
5. Stronger Consumer Protection and Security Measures
   Transactions exceeding 5,000 Birr must now use two-factor authentication, including PIN, OTP, or biometric verification. Furthermore, institutions must implement real-time KYC processes and risk-based transaction monitoring to prevent fraud.
6. New Definitions and Governance Requirements
   The directive clarifies legal definitions such as “direct” and “indirect shareholding” and introduces governance conditions, such as requiring 7 years of executive experience (with 3 years in managerial roles) for CEOs and senior executives in payment institutions.
7. Audit Requirements
   Issuers are required to conduct security audits every six months and report results to the NBE, ensuring continuous oversight and risk mitigation.
8. Equity Limits and Shareholding
   A single person is limited to owning no more than 60% of a licensed payment instrument issuer’s capital, promoting diversity in ownership. No entity, except government, telecoms, or banks, may hold more than 40% of subscribed shares.

Implications for the Financial Sector

The NBE’s directive reflects a broader national push toward digital financial inclusion and infrastructure modernization. It addresses longstanding concerns about fragmentation in the mobile money sector and introduces safeguards to protect users while encouraging innovation. By enforcing higher capital standards and mandating interoperability, the regulation is expected to attract more reliable market entrants and boost public trust in digital transactions.

Effective Date
The directive will come into force on May 12, 2025.

Conclusion
This directive represents a transformative milestone for Ethiopia’s payment industry. As digital payment usage continues to rise, the reforms provide a necessary framework to ensure secure, inclusive, and efficient financial services for all Ethiopians.

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For more details, access the full directive on the National Bank of Ethiopia’s website.