Page 294 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

Post Office, in the UK, which started offering money orders in 1838. In 1878, 4 years after the creation of the
UPU, a first UPU treaty on the exchange of international postal money orders was adopted. This treaty, called
the Postal Payment Services Agreement, is updated periodically and its latest version is still in effect today. Of
course, paper-based money orders have almost completely disappeared and Posts now mainly offer electronic
money transfer services. This can be done with partners, as we have seen previously, but many posts also offer
such services on their own (at the domestic level) or in partnership with other posts (at the international level).

For international remittances, Posts have started to offer electronic services at least since 1992, when Eurogiro,
initially a cooperative of European postal operators, launched its network. In 2000, the UPU has also released
its International Financial System (IFS), a software suite that is made available to postal operators that want
to exchange electronic money orders. As of today, IFS is used by more than 70 postal operators worldwide,
for domestic and/or international transfers. It is available both as a standalone version or as a cloud-based
version. Furthermore, a mobile version has been introduced in 2015, which allows posts to connect their
branches using smartphones or tablets.

For domestic payments, various Posts have managed to establish significant market shares. This is the case
of Al-Barid Bank in Morocco or CTT in Portugal for example. However, for cross-border payments, Eurogiro
and IFS operations are generally smaller than those of large international MTOs. Still, their availability in a
large number of outlets brings significant competition on the market and is an incentive for all actors to keep
their prices competitive. Indeed, on various occasions, it has been observed that the opening of a new postal
corridor led to significant price reductions from other market players.

4.4 BM4: Postal savings bank

BM4 is currently implemented by 39 postal operators worldwide. Only 5 of these, or 13%, do not report having
a fully automated management information system (MIS). All the other posts have digitized their financial
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services and offer their current or savings accounts in an electronic format, with all transactions being based
on a core banking system or equivalent.
Some Posts still maintain paper passbooks for their clients, but with all operations being stored electronically.
This is the case in Burundi, for example, where the country’s payment infrastructure is insufficient. Very few
merchants accept card payments and apart from Bujumbura and a few cities, ATMs are non-existent. The Post,
which has a strong presence in rural areas, therefore needs to maintain the paper passbooks in parallel with
its automated system so that clients can deposit and withdraw cash in post offices.
When electronic networks are more widely available in a country, Posts are trying to get rid of paper-based
systems, which are a potential source of error or fraud. In this regard, there are many opportunities for DFS
support services to partner with Posts.
Card-based solutions

Card networks could have access to millions of clients in dozens of markets by hooking up with Posts. Visa
and Mastercard are already working with various postal financial institutions from high-income or emerging
countries and have expressed interest to expand in this market. The Posts in India, Egypt, Algeria, or South
Africa, with hundreds of millions of clients, could potentially be very attractive partners for such companies.
Some Posts have also chosen to deploy their own card-based solution. For example, Nampost Savings Bank
(NSB), the financial services arm of Namibia’s postal operator, offers banking services to 600,000 people (out
of a total population of 2.3 million) through their “SmartCard”. This biometric card-based product enables
clients to withdraw money in post offices and at ATMs, to transfer money to an account or to another card,
or to make payments in retail shops countrywide using Point of Sale devices.

8 These Posts are from the following countries: Bangladesh, Central African Republic, Congo DRC, Nepal and Turkmenistan.

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