Automated payment scheduled to launch in May

Source: Reporter. 22 January 2011

By Asrat Seyoum
The National Bank of Ethiopia has finally set the date for the official commencement of the automated payment systems, which encompass the Automatic Clearing House (ACH) and Real Time Gross Settlement (RTGS), to be the beginning of May.

The New York-based software company, Montran Corporation, which specializes in providing payment system solutions, summoned bank professionals yesterday to inform them that the systems are ready to be used. According to the scheduled communicated to the banks, starting from Monday a four-week long training on both hardware and software part of the new systems will be given to the banks to enable them to better interface with the national systems.

According to Alemayehu Kebede, changes management and communications directorate director at NBE, the banks were given an overview of the whole payment systems, which are going to go live after four months, at a half-day workshop.

Under the financial sector capacity building project that is funded by the World Bank, ACH and RTGS systems, schemes hoped to transform the national payment systems in Ethiopia, were conceived in 2009.

The RTGS is a mechanism that is used to settle payments of large-value transactions conducted among the financial institutions, based on accounts held at the central bank. According to Alemayehu, this kind of system is used to settle payments on a transaction-by-transaction basis without any time lag.

On the other hand, ACH is better suited to clear low-value and more of retail natured transactions at a central data processing center. According to the director, this sort of system is an electronic payment network which nets and clears small- value and high-velocity transactions without having to use physical payment instruments like cheques.

For the banks to interface with the ACH  it is absolutely important to complete the core banking projects, while for RTGS one might not need the core banking application necessarily, according to the professionals familiar with the payment systems.

“The two systems would be useful in avoiding time lag and ensure security of transactions in the sector,” said Alemayehu.