Page 189 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

Transaction Flow: There are two approaches to initiating payment transactions, 1) Push Payments; and 2)
Pull Payments. In a push transaction, a consumer initiates, the payment for merchant goods or services, by
transferring funds to the merchant. This can be done by sending funds to a merchant code or leveraging
a merchant QR code. The merchant will then receive confirmation of the transaction activity allowing the
transaction to be completed. Pull payments require a merchant to seek authorization that a consumer has
funds available. With this authorization the merchant will execute the transaction and funds are ultimately
cleared and then settled to the merchants account.

Pricing: In most cases the merchant pays for acceptance. There is no standardized pricing as MMOs have been
experimenting with the best pricing approach. But in general the pricing is a percentage rate based on the
transaction size, with the fees being split by the actors in the value chain. In some cases there has been some
experimentation with consumer pay approaches, but this does not appear to be widespread.

Table 5 – High Level Overview of Key Deployment Characteristics

Deployment Business Model Closed or Open Transaction Pricing
Loop 1 Flow 2
EcoCash Acquirer Model Open loop Pull Payments Merchant pays to accept
(Zimbabwe) (Fee ranges between 1.25%
and 2% according to size of
transaction) 3

ZAAD In-house Model Closed loop Push Payments Free to accept until it reaches
(Somaliland) 40% activity rate; ZAAD due to
revisit pricing model 4
M-Pesa In-house Model Closed loop Push Payments Merchant pays to accept
(Kenya) (1% MDR where Kopo Kopo
is present; close to 0% MDR
where only Safaricom is present
due to downward pressure) 5

Easypaisa MSP Model Closed loop Pull Payments Merchant pays to accept
(Pakistan) (1% MDR) 6

1 PYMNTS.com (2015), Financial Inclusion Tracker. Retrieved from http:// www. pymnts. com/ wp- content/ uploads/
2015/ 08/ Financial- Inclusion- Tracker- August-. pdf
2 Kopo Kopo Representative. Interview. 27 Oct 2015
3 Econet Website https:// www. econet. co. zw/ ecocash/ merchant- charges
4 Pénicaud, C., & McGrath, F. (2013). Innovative Inclusion: How Telesom ZAAD Brought eMoney to Somaliland. GSMA
eMoney for the Unbanked blog. http:// www. gsma. com/ mobilefordevelopment/ wp- content/ uploads/ 2013/ 07/
Telesom- Somaliland. pdf.
5 MasterCard Representative. Phone Interview. 12 Nov 2015.
6 Easypaisa Website http:// www. easypaisa. com. pk/ en/ services/ easy- pay

8.2 Overview of Operational Models Observed

This section characterizes the key deployment models that have been identified. It focused on the acceptance
value chain and leverages some of the key activities necessary to support card acceptance to shed light on
nascent eMoney merchant acceptance and in so doing provides a consistent approach to understanding these
necessary activities, who performs them and how they are performed. The key elements for defining the
model relates to the distribution of key activities across the value chain. The activities include the following:

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