Page 265 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

Small business websites

Small businesses can use social networks to develop an online presence with a description of services, hours
of operation, contact information, videos, photos, etc. This is already happening to some degree.

NGO programs

NGOs often receive ‘restricted funding’ for a specific project, such as "providing financial literacy education
to 200 women", and then must measure the impact (e.g., changes in household income vs. a control group).
Social networks could facilitate program management by enabling NGOs to recruit participants, disseminate
training materials, conduct video training, and monitor the impact through surveys.

4.3 Payment networks
Social networks can enable a global, interoperable, multi-channel and user-friendly eMoney payment network
that connects buyers and sellers.

BoP eMoney usage has been limited to a few use cases: Receiving remote P2P payments then cashing out,
and then buying airtime. Even in Kenya, where mobile money is widely used, BoP diaries revealed that only 0.7
per cent of payment transactions were electronic and 86 per cent of those were for airtime. Several factors
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are preventing eMoney from being more widespread. These include:
• Cost: Low eMoney usage makes economic sense. Most BoP transactions are for small amounts which have
high transaction fees on a percentage basis. For example, 75 per cent of purchases in the Mozambique,
Tanzania, and Pakistan financial diaries were less than $2.
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• User experience: The eMoney user experience is not optimal. For remote bill pay transactions, paying the
correct business and ensuring payment is credited to the correct account is error-prone. For face-to-face
P2P transactions, it is easier for someone to reach into their pocket than log into a phone and type the
recipient’s mobile number. Compelling user experiences are needed for each use case (e.g., ‘bumping’
phones for face-to-face P2P transactions).
• Interoperability: Mobile money networks are often not interoperable preventing, for example, a Tigo
user from sending cash to an Airtel user. This problem is most pronounced in countries with market
fragmentation (i.e., no dominant provider).
Social networks are well-positioned to solve some of these problems.

• Large network: Payment systems are prime examples of the network effect – as more consumers and
merchants participate in a payment system, the more useful it becomes to all participants. Social networks
have a significant head start, as large numbers of consumers already connect. Social networks must still
convince users to link financial accounts, but WeChat proves high adoption is possible. Additionally,
many merchants have a social network presence. If these merchants enable social network payment
capabilities, it would reduce the need for BoP consumers to cash out.
• Directory services: Social networks often provide robust search capabilities to locate friends and
merchants. This feature can remove the challenge of ‘paying the right business’ when using mobile
money.
• Ability to decouple payment methods: Decoupling the method by which a consumer pays from the
method by which a merchant gets paid increases interoperability, acceptance, and flexibility (e.g., instant
credit). For example, a shopper might make M-Pesa instalment payments to the social network with the

7 Zollmann, Julie and Laura Cojocaru. Cash Lite: Are we there yet? Rethinking the evolution of electronic payments in Kenya based
on evidence in the Kenyan and South African Financial Diaries. BFA and FSD Kenya. January, 2015.
8 World Bank. Tanzania, Mozambique, and Pakistan CGAP Financial Diaries with Smallholder Households 2014-2015. Ref.
TZA_2014_FDSH_v01_M, MOZ_2014_FDSH_v01_M and PAK_2014_FDSH_v01_M. All datasets downloaded on March 13, 2016.

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