Page 172 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

3.2.3 Economics/cost sensitivity

• Similar to M0
• Since costs are so critical, transactions should not utilize much/any data costs (any costs should be
somehow subsidized/covered by other revenue streams)
• Low cost CICO transactions are essential, particularly in the early stages of rollout

• Like M0, we assume that poor people will not pay for electronic transactions, as either payors or payees,
BUT may be willing to pay a small amount for remote transactions to the extent that they can generate
incremental sales

3.2.4 Appetite for risk and need to manage risk

• Similar to M0
• Most transactions will be low value and face-to-face, posing little financial or reputational risk on the
system
• Will likely require only "light weight" know your customer account set-up

3.2.5 Operational assumptions

• Similar to M0 – must be easy to enrol as a merchant (to the unlikely extent that anything beyond P2P
processes are required)
• Some tax-related accommodations may be required from governments, particularly in the early stages,
so as to not disincent merchant adoption

3.3 M2: Small Shop

This segment includes merchants with some kind of shop: there may be family members or occasional
employees active in the enterprise.

3.3.1 Technology

• While single till, may have employees/family fill-in working in store/selling when owner not present;
therefore, likely to have a separate feature phone dedicated to business (since others will have access/
possession of the phone at times)

• Note that any dedicated store phones will likely have cash-out and spending restrictions; this also
presumes that the "store" phone number defines a store account that is distinct from the proprietor’s
personal account
• May use "merchant wallet" as settlement to buy inventory
• Similar to M0 and M1 transactions, the lowest common denominator, low cost feature phones, will be the
predominant form factor. However, in the future, may have access to an inexpensive (US$360 – $6100)
smart phone or semi-smart phone
• Users will likely conduct transactions via SMS and USSD interactions, but some buyers will likely be
initiating payments on smart or semi-smart phones

3.3.2 Key function and feature requirements

• May have rudimentary ecommerce / remote order transactions in the future
• May place some, but still low value on data
• Immediate funds availability, but perhaps to a slightly lesser extent than M0 and M1

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