Licensing and Authorization of Payment Instrument Issuers Directive No. ONPS/01/2020 (Ethiopia)

The Licensing and Authorization of Payment Instrument Issuers Directive No. ONPS/01/2020, issued by the National Bank of Ethiopia (NBE) in April 2020 and effective from 2 October 2020, is the landmark instrument that opened Ethiopia's historically bank-dominated, closed financial sector to non-bank digital-finance providers. It created, for the first time, a licensing category of 'payment instrument issuer' (PII), enabling non-bank entities, including the state telecom's Telebirr and Safaricom's M-PESA Ethiopia, to issue electronic money and mobile money. The Directive repealed and replaced the earlier Regulation of Mobile and Agent Banking Services Directive No. FIS/01/2012, which had confined mobile and agent banking to banks. Scope and applicability: the Directive applies to entities seeking NBE authorisation to issue payment instruments and provide associated services. Once authorised, a PII may provide cash-in and cash-out; local money transfers including domestic remittances and load/transfer to cards or bank accounts; domestic payments including purchases from physical merchants and bill payments; over-the-counter transactions; and inward international remittances. Core obligations: the Directive sets a minimum paid-up capital of ETB 50,000,000 and an initial licensing fee of ETB 5,000, and prescribes requirements on ownership and governance, account-management systems, transaction-security measures, customer due diligence and AML/CFT, safeguarding of customer funds, agent management, transaction and balance limits by customer tier, and consumer protection. PIIs must maintain systems ensuring the security and integrity of transactions and the protection of customer data. Supervision and enforcement: the NBE licenses, supervises and inspects PIIs, may impose conditions and corrective measures, and may suspend or revoke authorisation for breach. The Directive was subsequently amended by Directive No. ONPS/09/2023, which (among other changes) revised capital and ownership rules and broadened participation in line with Ethiopia's wider financial-sector liberalisation. As subsidiary legislation under the National Payment System Proclamation No. 718/2011, ONPS/01/2020 remains the core mobile money / e-money licensing instrument in Ethiopia.

1. 1Creates the non-bank 'payment instrument issuer' (PII) licence, enabling mobile money/e-money issuance (e.g. Telebirr, M-PESA Ethiopia)
2. 2Repealed and replaced the bank-only Mobile and Agent Banking Directive No. FIS/01/2012
3. 3Minimum paid-up capital of ETB 50,000,000; initial licensing fee of ETB 5,000
4. 4Permitted services: cash-in/cash-out, local transfers and remittances, domestic merchant and bill payments, OTC transactions, inward international remittances
5. 5Requirements on governance, account-management systems, transaction security, customer due diligence, AML/CFT, agent management and customer-fund safeguarding
6. 6NBE licenses, supervises and may suspend/revoke; amended by Directive No. ONPS/09/2023