Permitted Services

Which services may be outsourced to agents?

Agent networks typically provide the following activities on behalf of DFS providers:

1. cash in.
2. cash out.
3. customer enrolment.

In stricter regulatory environments, only one or two of these activities may be permissible. In more flexible regulatory environments, regulations may not be prescriptive, allowing all of the above and possibly more complex activities (e.g. loan disbursement/repayment).

Arguments for Stricter Limits

Consumer Protection

Only simple services such as cash-in and cash-out should be outsourced to agents. More complex services, such as loan disbursement/repayment or customer enrollment, should be provided directly by DFS provider staff.

Arguments for Greater Flexibility

Principal Responsibility

Even if DFS providers are permitted to outsource the delivery of various financial services to agents, they are still held responsible for the actions (or omissions) of their agents.

Financial Inclusion

Enabling DFS providers to open accounts remotely and provide a wide variety of services through agents can lower costs, improve the financial viability of agents, and foster financial inclusion.

• Allowing DFS providers maximum flexibility regarding which services to outsource to agents typically increases the potential impact of agents on financial inclusion, particularly with respect to rural and underserved areas.
• To ensure that DFS providers have given careful consideration to risk mitigation, regulators may wish to require that providers submit detailed plans for how they intend to manage the risks inherent in the provision of each service that they propose to deliver through agents.
• Proportionate agent supervision could help to ensure that DFS providers are following proper due diligence procedures and effectively mitigating agent risk.