Page 22 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

2.2 Products and Services

Figure 3 – Products and Services
Secure: people need to trust that money held in a digital transaction account is secure, and have assurance that money will go
only to the designated recipient, with a record of the transaction.
Affordable: the cost to use the system must be very low. To actually replace the use of cash, the cost to the consumer (as well as
to the merchants) will need to be close to zero.
Convenient: the system needs to have accessibility and to be easy to sign up for and to use. Many poor people do not have the
identity documents usually required to create financial accounts. The system has to be understood by prospective users with lim-
ited or no mediation.
Open: the system needs to be able to reach many (ideally all) counter parties for both making and receiving payments. It should
not require special, costly, or time-delayed accommodations. It should make it easy for an individual to integrate into multiple
financial systems of the country—including to those systems utilized by higher-income earners.
Robust: a digital payment system needs to have high performance and to satisfy user’s needs. It needs to be available for use as
needed, like cash. As the number of participants (and their usage volume) grows, availability should remain high and be able to
handle peak volumes without an interruption in service

2.2.1 Transaction Accounts

Users, including consumers and merchants, have a requirement to store their funds safely. Today, poor
consumers and merchants in developing countries do this largely through holding cash. Alternative include
eMoney wallets, from non-bank providers, or bank accounts. eMoney wallets have been successful in reaching
consumers who have not been able to access transaction accounts from bank providers.

2.2.1.1 What is eMoney?

Before defining the details of the respective products and services features and functionality, it is useful to
understand the broader eMoney platform in context of where it sits in the traditional banking ecosystem. There
is often a misconception as to where the value actually resides (i.e. is it similar to physical cash in a wallet or
closer to electronic cash in a savings account at a financial institution).

• eMoney is a liability of an eMoney provider (sometimes called Issuer), who records a value against a
transaction account ledger they keep for the depositor. Deposits can either be made in cash (typically
through an agent), or by receipt of a transfer from another consumer, business, or government entity.
The eMoney provider typically uses a software platform from a support services provider to account for
the ledger balances.
• Regulation requires the eMoney provider keep the entire value of accounts on their ledger on deposit
in an aggregated account at one or more commercial banks. This account is often structured as a trust
account. The total in the trust account must always equal the total on the eMoney provider’s ledgers of
customer balances.
eMoney, in one sense, is similar to money in a bank account, in that it represents a liability of the provider
to the account holder. Funds held in banks, of course, are typically protected by some form of government
insurance, and banks are allowed to lend or otherwise invest a certain amount of balances held on account.
Funds held with an eMoney provider do not typically have the same types of government insurance, but they
are “100 percent reserved” through the funds held in deposit at the trust bank or banks.

2.2.1.2 Description

A transaction account is an individual account hosted by a DFS services provider (either a MNO, a bank or some
other type of provider permitted to do so by regulation). The term “digital wallet” or “mobile wallet” is generally
used to refer to a transaction account that is primarily accessed through a mobile device. A transaction account

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