Page 23 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

typically allows deposits and withdrawals in cash (discussed below in “Cash-in”, “cash-out”. Prepaid cards may
act as transaction accounts in some markets.

2.2.1.3 Attributes
Product attributes for transaction accounts accessed through digital devices include the following:

• Safety (access is through unique PIN code)

• Security (actual store of value ledger is registered on a secure platform, accesses through the handset)
• Speed (balances and transaction occur in real-time)
• Convenience (accessed through the handset)

2.2.1.4 Business Model
The various providers of transaction accounts have different business models. Notably, eMoney wallets
and bank accounts have different business models. Banks have a multidimensional business model based,
for example, on intermediation of deposits, cross-selling of loans and several fees. For example, banks are
sometimes allowed to charge a monthly service fee for banking accounts (depending on regulation, product
and segment). An MNO acting as an eMoney wallet provider may have a simpler business model, which will
often depend on fees generated through Cash-in and/or Cash-out transactions. An eMoney wallet provider’s
business model may also vary depending on whether the MNO is directly licensed or set up as a subsidiary.
The business model is often driven by the lead institutions broader strategy:

• MNO led models: A large percentage of airtime in the emerging markets is pre-paid and sold through third
parties. MNO’s thus have a challenge as attrition rates are high and cost of distribution via the third party
airtime resellers is also high. An eMoney account adds an element of “stickiness” to the client relationship,
solving a portion of the attrition challenge. An eMoney account also enables the MNO to sell pre-paid
airtime directly to the consumer, thus eliminating the commission cost associated with distribution
through third parties. Traditionally MNO led models have been seen as a loss leader for the their core
businesses. As the industry matures, although depending on its structure and licensing arrangements,
regulation and management pressures may lead to standalone business units to be formed within the
MNO’s. eMoney businesses are therefore becoming standalone profit centers within the MNOs.
• Bank-led models: In some markets regulation has forced bank-led models. From a business perspective,
eMoney platforms and associated accounts are often seen by banks as a low-cost hosting alternative to
their traditional banking platforms introducing a low cost product “lite” solution to reach the lower end
of the market. eMoney accounts are thus seen as an onboarding product by banks.
Independent Models: Independents do not traditionally have the brand and reach which MNO’s and banks have
and have generally approached the market by using mobile to compete with existing paper-based remittance
products at a domestic level. They vary in their business model with some offering accounts and others offering
over the counter money transfer services.

2.2.1.5 Best Practices
The following areas have been identified as best practices for digital wallet providers :
2
• Overcoming logistics and delivery challenges – a lack of infrastructure creates logistical challenges
for agent and cash management. Leveraging local partnerships, flexible agent financing, and smarter
transactional data analysis are enabling providers to address these challenges.

2 GSMA, “emoney in rural areas”, 2014.

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