Page 108 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

Executive summary

This report investigates the evolution and sampling of the types of technologies used in digital financial services
(DFS). Many of the DFS systems operating today have evolved in some form from progenitor value added
services (VAS) products offered by mobile network operations (MNOs) in the mid-1990s.

With basic and feature phones dominating most DFS markets, service providers (SPs) mostly facilitate access
to DFS systems via text-based unstructured supplementary service data (USSD) and the short message service
(SMS)-based subscriber identity module (SIM) Toolkit, both developed in the 1980s and 1990s, and which
operate on almost all general system for mobile communications (GSM)-based handsets.

In more recent implementations, graphical DFS-oriented apps using Java and smartphones have emerged, but
these are not as yet in mainstream use in DFS markets.

Merchant services in DFS are growing, with merchants implementing near field communication (NFC)-based
and magnetic stripe-based point of sale (POS) devices to accept payments. But while NFC-based payment
facilities are growing, they are still smartphone-centric. NFC sticker technology can retrofit all phones with
NFC capabilities. Java applets providing DFS on feature phones are gaining in popularity. Similarly, sound-based
access is growing, but still in limited use.

The thin SIM is an innovative technology being implemented to obtain alternative network access and to
secure DFS transactions.
Iris is becoming the preferred biometric capture method in DFS countries. This is set to increase with the
emergence of application programming interfaces (APIs) for Iris capture and phones with Iris scanners.

Access to and integration with existing payments infrastructure for non-bank payment service providers (SPs)
is an evolving technical enhancement to DFS, especially as services between SPs become interoperable and
some integrate into national payment switches.

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