Page 238 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

eMoney to pay employees and suppliers. Additionally, unless an individual can repay their loan with eMoney,
they must cash-out, which also breaks the eMoney lifecycle. eMoney for value chain financing will help, but
SHF financial diaries suggest loans from friends/family and local stores can be more important sources of funds.
#4 – They will just cash out

Even if value chains use eMoney, currently, farmers will just cash out. Cash is usually cheaper, easier,
interoperable, and not reliant on mobile coverage or agent presence.
Accordingly, BoP eMoney usage has been limited to a few use cases: receiving remote P2P payments then
cashing out, and buying airtime. Even in Kenya, where mobile money is widely used, BoP diaries revealed
that only 0.7 per cent of payment transactions were electronic and 86 per cent of those were for airtime. In
6
these two uses cases, eMoney is cheaper and simpler with mobile money agents solving the interoperability
program with their cash-in, cash-out services.

Figure 8 – Transaction frequency by average ticket amount

Cost: Low eMoney usage makes economic sense. Most BoP transactions are for small amounts which have high
transaction fees on a percentage basis. 75 per cent of purchases in the Mozambique, Tanzania, and Pakistan
financial diaries were less than $2.
7
Applying a variety of tariff schedules against this collection of low value transactions would cost up to 22 per
cent. Fees are also contagious – a recipient will eventually incur their own transaction fees when they use
their funds.

6 Zollmann, Julie and Laura Cojocaru. Cash Lite: Are we there yet? Rethinking the evolution of electronic payments in Kenya based
on evidence in the Kenyan and South African Financial Diaries. BFA and FSD Kenya. January, 2015.
7 The financial diaries in Mozambique, Tanzania and Pakistan identified individual types of items that were purchased (food, air-
time, petrol, etc.). Since these items may have been purchased at the same time, all household items purchased by an individual
on a particular day were assumed to be part of the same purchase. This approach avoids overstating the number of low value
transactions. To isolate purchase activity from financing, the effects of store credit and other financing were ignored (e.g., paying
at the end of the month).

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