Page 195 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

includes enabling merchants to enjoy greater transaction security and payment settlement services. More
sophisticated value-added-services allow merchants to keep on-going transaction records, provide customer
tracking (including loyalty) and credit service (Grow), and to provide merchants with visibility into their business.

Figure 9 – Easypaisa Merchant Acceptance

8.3.1.2.1 Evolutionary Pathways for the MSP Model

Because of the potential for variation in the MSP model it is possible to imagine that as eMoney deployments
continue to evolve to support merchant acceptance this model will experience some variation as deployments
mature. While too early to describe what these variations might look like, several factors can already be
identified as drivers of model variation going forward, these include: 1) adoption of new technology to support
merchant acceptance; 2) the adoption of open loop approaches; and 3) the use of Payment Facilitators to
support merchant acceptance.

One driver of new technology adoption has been the deployment by MMOs of POIs for merchant acceptance.
In many cases MMOs have opted for technology that reflects an extension of their P2P capabilities to drive
merchant acceptance. However, there are a number of cases where a fundamental change in technological
approach has been adopted. Beyond mobile wallets this has meant the adoption of physical terminals, both
traditional terminals and NFC enabled terminals. In the case of POS terminals, this has meant the corresponding
distribution of companion cards with traditional payment scheme marks. In the case of NFC terminals, there
has been a consequent distribution of NFC stickers to customers in lieu of a robust base of NFC phones.

The MSP model is likely to take hold in markets with multiple wallet providers. While closed loop structures
remain dominant, processing and settlement can still be expected to be executed in-house by MMOs. However,
there will be pressure to accept payment types or acceptance marks to drive acceptance by enabling a more
robust merchant value proposition. This move towards open loop structures or interoperability at the POI, will
force changes in the current approaches to in-house processing and settlement capabilities.

One such avenue for open loop development is the establishment of Payment Facilitator arrangements.
Payment facilitators exist in the card space to drive low cost acceptance, through cost reducing innovations
in on-boarding, risk assessment and POI deployment. The operative development in the evolution towards
open loop structures would be the provision of processing and settlement capabilities. A technological savvy

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