Page 266 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

social network paying the merchant in full via an Airtel account. The concept of decoupling already exists.
For example, PayPal uses this arrangement.
• Lower POS infrastructure requirements: Face-to-face environments, where BoP commerce typically
occurs, can use the same social network infrastructure that enables e-commerce transactions. For
example, a farmer could visit a local food vendor, find that vendor’s Facebook page, and make the
purchase through that page. WeChat already uses this approach in China.
• Ability to subsidize: Because social networks target multiple revenue sources and stakeholders, they
can incent adoption through subsidized pricing. Options include:
– Offering free payments when using balances already in social network wallets.

– Reimbursing MNO fees for transactions involving eMoney.
– Providing payment rewards (analogous to credit card ‘cash back’ or points to entice consumers to
use their cards), thus providing additional incentives for merchants to accept those tender types.
– Bundling payment costs within other costs to remove payment price sensitivity (e.g., sales commission
for generating revenue for a seller).

WeChat uses some of these methods. For example, P2P red envelope transactions do not incur fees.

4.3.1 BoP use cases and benefits

P2P payments

With proper licensing and MNO linkages/interoperability, social networks could provide simple and lower
cost domestic and cross-border remittances. For example, a U.S. resident with linked bank and social network
accounts could send money to an Indonesian relative in their ‘friends’ list. That recipient could store funds in
their social network wallet, transfer to their bank account, or cash out by transferring funds to a social network
or MNO agent.

Face-to-face purchases

A consumer could pay a merchant if they belonged to the same social network. For example, the merchant’s
phone could generate a barcode that the consumer’s phone scans. The consumer would approve the
transaction amount and the social network would transfer money to the merchant. Merchants would not
need to invest in chip terminals or standalone barcode readers, nor would they need to belong to multiple
mobile money networks.

Remote purchases

Similar approaches could be used for remote purchases (e-commerce or order-ahead functionality). This could
mimic traditional processes with payment coming from a digital balance within the social network account or
from the financial account linked to the social network account.

Lending (digital history)

As more and more transactions become electronic, consumers will increasingly build income and expense
transaction histories. These histories can solve the challenge of proving income when qualifying for a loan.

Instant credit

Decoupling also opens up the possibility of social networks providing credit. For example, a social network
might allow a farmer to buy equipment on credit while paying the merchant immediately.

238