Page 165 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

a robust payment acceptance network, the cash management problem just gets transferred from the payer
to the agents.

It is important to note that the notion of critical mass of merchants/payment acceptors entails a sufficient
number and type of merchants such that the customer can displace a meaningful portion of their cash-
based purchases with electronic payments. For example, while payment schemes anchored in transit have
the potential to incent consumers to open accounts and have the potential to generate a large number of
transactions, transit applications alone will not make a meaningful impact on the total number cash transactions
conducted by the poor.

1.2 Assumptions

The workstream made a number of assumptions about the ecosystem in developing this paper. Assumptions
include:

• All but the smallest of merchant segments will have at least "semi-smart" phones
• Most countries will move towards some type of interoperability between domestic mobile wallet schemes
• Most, but not necessarily all, merchants will highly value (and perhaps even require) immediate access
to funds
• Most merchant segments have both an in-person (POS) and remote (eCommerce, etc.) component: the
balance of these within each segment may shift with the adoption of electronic payments
• User requirements for merchants and other payments acceptors will vary by segment: this includes
technology, ERP integration requirements, economics, etc.
• Merchants will want to accept any and all cost-effective payment types that their customers want to use;
adding additional payment schemes must be easy for sales staff to understand/work with, and would
optimally be accessible through a single device and even have a single/consolidated settlement

• Merchants should not be required to / incented to agree to exclusivity; rather they should be encouraged
to accept competing forms of digital payments.

1.3 Hypotheses

In developing the value chain and segmentation scheme, the work stream tested the following hypotheses
about the evolution of digital payments acceptance.

• No single factor/benefit will be sufficient to incent merchant adoption of the payment scheme; some
combination of benefits such as new customers, more sales from existing customers, reduction of cash
on hand, interest earned on eMoney balances, etc. will be required
• Sellers should be willing to pay for those and other features/benefits that produce more revenue

• Broad adoption of electronic payments will enable new types of commerce, particularly for merchants
that would then be able to sell products and services remotely

• Payments will eventually become an embedded enabler in broader commerce and/or community
platforms that will provide benefits to payment acceptors

• Some tax-related accommodations may be required from governments, particularly in the early stages,
so as to not disincent smaller, and perhaps even larger, merchant adoption
• Very poor merchants will not pay for face-to-face electronic payments, nor will their poor customers

• Participation in electronic payment schemes may help merchants secure some level of credit since lenders
will be more willing to lend with better data. In addition lenders’ risk could be reduced and operating
costs lowered with electronic loan payments (e.g., payments made from electronic wallet balances/
tapping into the settlement stream).

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