Page 11 - ITU-T Focus Group Digital Financial Services – Recommendations

ITU-T Focus Group Digital Financial Services
Recommendations

Title of recommendation Fostering acceptance of electronic payments
Working Group Ecosystem

Audience for recommendation DFS stakeholders

Policy makers should promote initiatives and incentives that encourage merchants and other payment acceptors
(e.g. billers, farmers, government entities) to accept electronic payments.

• Stakeholders agree on the benefits of reducing cash in the ecosystem. To achieve this, it is critical to give
consumers avenues to spend money received electronically. Merchant acceptance of electronic payments
from consumers and other businesses can increase the velocity of money in the ecosystem, therefore
reducing the costs and risks associated with “cash-in, cash out”.
• The DFS Focus Group has published a series of reports on electronic payments acceptance. “Enabling
Merchant Acceptance in the DFS Ecosystem” describes the value chain and segmentation; four other
reports look at particular aspects of acceptance: B2B Payments and the DFS Ecosystem (if a merchant can
buy their inventory electronically, they will be more willing to accept consumer payments); Merchant Data
and Lending (merchant transaction history can lead to credit extension); The Impact of Social Networks on
Digital Liquidity (social networks may enable small merchant eCommerce); and The Impact of Agricultural
Platforms on Digital Liquidity (agricultural platforms should integrate with consumer wallets).
• While recognizing the importance of the topic, policy makers should be aware that there is no single
“killer app or factor” to enable electronic acceptance. A combination of the factors below should be used
to create incentives for small merchants.
• DFS providers and other stakeholders should cooperate to ensure that merchants are educated about the
benefits of accepting electronic payments: customer convenience and preferences, safety/reduced theft
of funds, easier and/or cheaper access to credit, new revenue streams, enriched data/information about
customers, customer relationship management, etc. Policy makers should recognize that merchants of
different sizes and in different segments have varying needs.
• Policy makers should consider tax incentive policies to encourage merchants and other payments
acceptors to take electronic payments. Measures should be considered to ensure that small merchants
which are today accepting only cash are not subject to immediate taxation upon moving to electronic
payments. Charging tax on mobile money is quite common where there are difficulties in collecting tax
revenue. Tax authorities need to research the possible impacts of taxation first and then decide on the
taxation on a case by case basis.
• DFS providers extending payment acceptance services to very small merchants may not be profitable from
transaction fees alone, and are therefore likely to extend their offering to include a variety of services. The
most critical of these is the provision of credit to merchants (and in some situations to their customers).
Regulators should be open to allowing DFS providers to extend this credit, with appropriate safeguards
on lending.
• Commercial value chains should leverage general purpose payment instruments/transaction accounts
(rather than proprietary/single-purpose solutions such as e-vouchers) as much as possible in order to
improve efficiency and better targeting of subsidies within the DFS.

• As rapidly emerging person to person (P2P) payment and merchant commerce platforms, social networks
can bring significant value to the small merchants and their customers. Policy makers should consider
policies that encourage adoption and use of social networks for commercial transactions. That said, social
networks are tremendously powerful and regulators should monitor and manage them judiciously with

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