Page 27 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

Cross border remittances have started between regional DFS operators with agreements being announced in
West and East Africa. The nature of these agreements are still bilateral and either occur in a cross border “on-
us” environment (i.e. from a provider’s company in one country to the same provider’s company in a second
country) or in an “off-us” environment.

The cross border environment faces many regulatory challenges including issues such as Exchange Controls
licensing, varying AML and KYC policies and central bank policies around clearing and settlement.

Product attributes include convenience, immediacy, and potentially lower costs.

2.2.3 Bulk Payments

This term refers to payments made to multiple recipients. Typically, these are government payments (benefits,
cash transfers, salaries), donor payments or payroll payments. Bulk payments are a critical enabling component
of the DFS Ecosystem and are the subject of a separate report from this ITU Focus Group.

2.2.4 Merchant Payments
This term refers to payments made to merchants or other payments acceptors (such as billers or governments)
for purchases. These payments may be made in person (POS or “proximity payments) or remotely (eCommerce
or “mobile” payments. Merchant payments are a critical enabling component of the DFS Ecosystem and are
the subject of a separate report from this ITU Focus Group.

2.2.5 Savings Accounts

2.2.5.1 Description
Digital savings products can broadly be defined into two product groups, individual savings and group savings.

2.2.5.1.1 Individual Savings

Individual savings products tend to satisfy two overlapping needs on the part of consumers. One is for a return
(interest) on money that is being held. The other is segregation of funds (away from the “everyday spend” of
the transaction account) for short term money management. Saved funds may be either earmarked for specific
purposes (school funds, the purchase of a bicycle) or be for more general needs (saving for emergencies).
Products in this space may create a partition in the eMoney account to keep a certain amount of funds liquid
for daily use and the specific needs are stored in less liquid “partitions” to be released separately when the
consumer requires it. Other providers may create separate savings accounts. Some providers create bundled
products such as savings and credit combined where the savings sometimes forms part of the security for
the loan product.

2.2.5.1.2 Group Savings

DFS providers have designed products to facilitate group savings schemes. These schemes copy many “club
savings” products popular in the developed world, where a group of people contribute to a “pool” and that
pool is distributed by lottery or formula. In the digital world, the group’s cash is stored on the eMoney platform,
which will release the funds to an individual once a set of conditions are met (e.g. three individual PIN’s are
entered) to release funds and individuals in the group receive SMS notification when transactions happen.

From a business case perspective DFS providers see savings products as a tool to build balances in the eMoney
ecosystem and ultimately earn revenue from transactions generated off the digital wallets.

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