News Column

Dashen Bank Jumps On Board the American Express

July 16, 2014

Abdi Tsegaye

Although initially only available for overseas issued cards, Dashen will soon begin providing cards to local customers

Dashen Bank is to begin accepting American Express cards as of July 26, 2014, in addition to MasterCard, VISA and UnionPay. The service will initially only be available to people who have acquired the card from foreign banks.

The Bank's deal with the American Express Company has cost a few million dollars, although bank officials declined to say how much. The new deal will enable local and international American Express card holders to access the services of Dashen's 170 ATMs to withdraw money and 800 POS terminals to make payments at hotels, supermarkets and other stores. Where ATMs are not functioning and where queues are long at the Bank's branches, card holders can issue a receipt for the amount of money they need from encashment POS terminals available at the Bank's branches. The Bank gives priority services to clients presenting these receipts, says Estifanos Befekadu, head of the Promotion Division at the Bank.

The payment Dashen has made on signing the agrement enables it to deliver services to domestic clients obtaining the cards from Dashen, whereas foreign banks, whose clients come to Ethiopia and use the cards they bring along, pay Dashen a commission for that service.

Dashen will begin issuing this card to its domestic clients in September, in addition to the VISA card it is already issuing. It does not have such provisions for MasterCard - an American electronic payment service - or UnionPay, which is a Chinese service.

Though officials of the Bank refrained from disclosing the amount paid to American Express for the right to acquire as well as issue these cards exclusively in Ethiopia, it is said to be in the millions of dollars.

Dashen Bank pioneered Visa and MasterCard into the Ethiopian banking industry. It is also the first private commercial bank in Ethiopia to sign a similar agreement with the Chinese UnionPay. It made the move to include American Express following persistent demands from operators of hotels, supermarkets, restaurants and jewellers in Ethiopia, says Estifanos.

It is also a lucrative business, as the Bank has discovered with the other cards already in business, he added. Transactions of the VISA card through ATM and POS outlets has reached 3.6 billion Br, as well as generating 100 million dollars in foreign currency. Dashen has 1.2 million customers, as of June 30, 2014, of which 300,000 are VISA card holders, according to Estifanos.

With its total deposits reaching 18 billion Br, the Bank is also underway in its bid to launch mobile and agent banking, through which companies and commercial establishments, through an agreement with the Bank, provide services to the Bank's customers. It is set to start serving through agents within the coming three months, which will also be followed by internet banking services, according to Estifanos.

Established over a decade ago, with an initial capital of 50 million Br, Dashen has increased its total capital to two billion Br in 2012 - 737 million Br of this is paid up. It is the biggest private bank in the country, with deposits of 18 billion Br mobilised from 1.2 million depositors.

Dashen's dividend per share has been one of the highest in the industry over the past few years. It achieved a staggering 926 Br earnings a share from its operations in 2011/2012, up from 753 Br the year before and 609 Br in 2008/09. The earnings per share for the year 2012/13 were down to 823 Br, which was due to the declining net profit to 607 million Br in 2012/13 from 652 million Br the previous year. The Bank operates 134 branches and five forex offices in the country at present.

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Source: AllAfrica

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