Page 317 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

1 What are bulk payments?

The DFSs ecosystem, in many developing countries around the world, is entering into a second, post-
introduction phase. Many DFSs are available for the unbanked and underserved, and in some countries a
significant penetration of these products among the underserved has been achieved.

Many countries, however, suffer from very slow adoption rates with new financial services and products, and
even those countries with higher adoption rates suffer from low product usage. It is a common point of view
that so-called “bulk payments” could accelerate the adoption of and usage of digital wallets by the underserved
by providing an incentive to consumers to open their wallets.

Bulk payments are one-to-many payments that go from one paying agency to many beneficiaries at once.
There are always at least three roles in cash payments:

• Paying agency: This is the party that initiates the bulk payment. This could be a non-governmental
organization (NGO), government agency, or private company.
• Implementing partner: This is the organization that enrols beneficiaries and records the address to where
the payment should be sent. This role may be done by the paying agency, but is often fulfilled by a NGO
or other third party.
• Payment provider: This organization routes money from the paying agency and to the beneficiaries. This
may be a bank or a third party.
The term “bulk payments” includes a variety of different kinds of payments. Some common types of payments
include:

• Salary payments and expense reimbursements;
• pension contributions;
• unconditional cash transfers and crisis payments;

• conditional cash transfers.
One organization could fulfil multiple roles inside of the same cash transfer program. For example, a government
could fulfil the role of the paying agency in a disaster relief payment by paying money into the program, and
also act as the implementing partner that enrols all of the beneficiaries.

Throughout much of the world, cash is nearly the only option for making these bulk payments. The purpose of
the current study is to examine how bulk payments are made in a selected number of countries where digital
wallets are either well established or on the brink of expansion.

Much of this report will focus on government-to-person (G2P) payments, because that is one of the most
common use-cases for bulk payments in the developing world. However, in the suggestions, this report will
outline a bulk payments ecosystem that would serve the needs of all bulk payers, including NGOs, governments,
and businesses.

2 History: How bulk payments are made

The bulk payments ecosystem is highly fragmented. In developed payments markets, bulk payments are
almost entirely electronic. Governments and businesses have access to efficient electronic payment systems
through which they can send transfers. In the United States, for example, the Social Security Administration

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