Page 180 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

Type of Payment System
Cards Digital Wallet
Open Closed Closed Open Bill to Credit Transfer
Loop Loop Loop Loop 1 Carrier
FX Arbitrage 

Airtime Arbitrage   

1 Wih interoperability
2 With or without interchange

4.2 Costs to Merchant Services Providers

The costs of providing merchant payments acceptance is partially determined by the payment system being
used by the provider, and partially to choices that the provider makes. Costs include:

4.2.1 Transaction Processing

The merchant services provider needs to process the transaction. This includes delivering it to a payment
switch (if required), accounting for the transaction on its own books, and managing the clearing and settlement
of the transaction. It may choose to use a processor to do these tasks, or handle the tasks itself (in-house).

4.2.2 Interchange

If the payment system being used specifies interchange as a component, the merchant services provider will
be either directly or indirectly responsible for paying this cost to the system (and, in turn, to the buyer’s DFS
provider).

4.2.3 Merchant Acquisition

The merchant needs to be signed up for payments acceptance: this can be done either in person or online.
Payments system rules may put requirements on merchant services providers governing their responsibilities.

4.2.4 Merchant Onboarding

Once signed up, the merchant needs to be enabled to use the service. There may be technical and training
components to this.

4.2.5 Credit

If payment system rules specify that the merchant services provider is responsible to the system for the
behavior of its merchants, then the cost of managing this, and making payments on behalf of merchants in
certain circumstances, becomes a cost to the merchant services provider.

4.2.6 Fraud
There will be situations in which the merchant services provider is responsible for fraud committed by or against
their merchant customers: again, the extent of this is determined by payments system rules.

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