Ideas after reading the book on Digital Wallets

Hello all! I wish everyone a productive and prosperous 2011. I just finished reading “The March of Mobile Money”, the book that I mentioned earlier which I ordered through CoD. I hardly knew about the author who is a much accomplished man and owner of the Digital Wallet US Patents (USPTO #5,590,038, #5,884,271, #7,308,426) filed first in 1994, then 1996 and then 1997, the last one finally awarded in 2007 which  must have left the original submission highly obsolete. But it did not actually; the basic definitions he made are still valid. His company is called C-SAM, a technology provider for m-commerce much like Intuit. Intuit should certainly bring him in board for consultation; he is the tech advisor to Indian Prime Minister Manmohan Singh.

The book says, “If at all there is a single “killer mobile app” beyond voice and messaging in well-developed markets, it will be cash-replacement over mobile phones with NFC (Near Field Communications).”

The Book was an excellent reading into the entire Digital Wallet concept and how the three industries – Banking, Telecom & Merchants fit into the role of Fund, Pipe and Provider. You all should try reading this book it really would be a great catalyst for ideas for this project. I will be quoting many different lines from the book that are relevant in the understanding for this project of Intuit. Reading the book also gave me so many ideas that I would have to spend hours just typing them down on a word file and then a few more hours posting them in the relevant topics in this lab. Some interesting first facts – 1/5^th of Global Economy changes hands every day. This will certainly increase when 4 billion (and counting) mobile users can do transactions at the speed of light. The DW would serve local requirements on a global platform. Basically, the adage “build it and they will come” will work very well with the DW.

Voice service will eventually be free as at present too people can use Skype and other VoIP software to make free international calls using the internet enabled devices. Telecom income will thus mostly come from bandwidth charges and other data charges. And yet telecom is where the huge investment is, because of the wireless pipe space that each country sells. Banks (PayPal) and merchants (eBay) can both be setup online at relatively lower costs. A recent spectrum auction in the US was seen as a fight between the old evil telecom giants and the new-age smart companies that wanted to transform the business and make the consumers the king. In India, the 2G spectrum allocation scam is to the tune of around $15 Billion. Who knows what the 3G scam will be worth then; it has not been “announced” yet J

Although I must say at times I felt that the book was written by a ghost writer, but in any case it contains many pearls of wisdom and it doesn’t matter who really wrote it. The book said that it would not be easy to get the banks to loosen their iron grip on the money markets. The vested interests and money lobbies will try their level best to maintain status quo and prevent people from free and unhindered access to payments and money. But it is also a fact that there will be massive overlapping in the roles played by the 3 main industries (Banking, Telecom & Merchants) and if one hesitates to open up to the DigiWallet (DW hereafter) the other will pounce and snatch away their function. It is indeed quite frightening that companies might want to prevent people from getting out of the debt trap of the archaic credit card system. Banks and telecom will get into a major overlapping mode, already telecom ATMs are fast appearing besides bank ATMs in busy shopping areas. 

Of the three industries involved in the DW system and concept, the merchants are closest to the customers and want to give the customers the most freedom and services, while the banks are the least friendly, they most probably will want to maintain a position as close to the current position. They would want the DW restricted to a banking device and not allow the merchants and telecom companies to take away any more of their money pie which the merchants already take away in the form of store credits and telecom companies take away in the form of phone prepaid balance as a basic example. We should hope that a non-banking player gets control of the DW. The DW economy would herald an era of massive reduction in idle and wasteful capital. There would be fewer cases of black economy, people hoarding bundles of notes. Even if you take the cash people normally keep at home and in their wallets which they do not use at any time, and multiply it with 3-4 billion mobile DWs, then the amount of capital that would result would allow for an incredible jumpstart to the world economy. Who knows what all could be possible with this much capital.

On the other hand complete dematerialization of money also poses some serious threats. The final scene of fight club shows the protagonist bombing all the credit card buildings to delete all the records and wipe the slate clean. A complete system breakdown on a world economy primarily supported by DWs could result in cataclysmic worldwide economic annihilation. If some are to be believed, the recent sub-prime bust was deliberately designed by a small group of investors with vested interests in the collapsing share prices that would result after the recession, which along with other assets they would be able to consolidate and buy back after people started selling their assets at a loss in order to cut short bigger possible losses.

If the DW was alive and kicking in 2008 and maybe since the years when the property bubble was built up, would it have prevented the sub-prime crisis?

Credit cards won’t exist physically but credit companies will exist forever. There is money to be made from interest and there are people who are always short of money but who need credit to generate more money so they can not only have some income but also manage to pay back the loan to the credit company along with a hefty interest. Those wealthy customers who don’t need credit, will stop having credit card accounts all together, after all the credit cards first began as a status symbol, and as ease of shopping devices, but have gradually become need devices. So the journey from status symbols – to convenience symbols – to smartness symbols – to shame symbols, will quite a unique one. How many products do you know that go from premium to mass as their life progresses? Now with DW your privacy levels will be set. Your invasion of privacy will only be allowed to level 1 for most merchants and banks.  You might choose to share more levels on your own for added functionalities with other merchants. But the moment you become a credit defaulter, the bank will gain access to the highest level 5 privacy invasion and will in essence be able to go through your stuff. The point of this is that they will be able to know why you have defaulted on the payments. Your spending history will tell them if you are really facing tough economic conditions or if you are just trying to cheat the bank by not paying back the credit you used. Now with the spending history and income history on record, credit companies will be able to better understand defaulters.  The trend of offering credit card settlements across the board is a very bad one. Even well off customers fake cash-crunch problems and get away by paying a fraction of what even the principal amount was, let alone the interest. So now credit companies won’t have to waste writing off loans to such customers and thus they will not need to harass people who really are in a bad financial state. One will balance the other.

The current payment system is obviously flawed. If I am a billionaire I need no credit card. A credit card is the same as a debit card to me. So I will go for a debit card, as why pay credit charges when I don’t need credit at all with all that money in my account. But the present situation is such that most international shopping sites require a credit card and won’t accept a debit card. It should be the other way around isn’t it? The debit card user immediately gives away his own money whereas the credit company has to shell out money initially in the case of the credit card.

The magnetic stripe/strip is obviously out-dated. First there were the carbon copy swipers that used to print the grooves of the credit card onto another paper using carbon paper. Then the magnetic stripe came and it is so out-dated now. The new DEMAT money system requires something more reliable. Sometimes the ATM will not read the mag strip unless I insert and take it out very very slowly. Every time a credit card is denied at the mall, you would hear the owner tell the cashier, “Try it again, slowly”.

Many internet sites require credit card details for sign-up. Even for free trials they ask for credit card info and even Intuit’s own free-website builder tool asks for a credit card. I have not once in my life entertained any such website. I think most people close the page when they come across this part. There is a whole new family of websites that state in their site headers that no credit card info is needed.

I’ve always wondered how people pay for gas in the USA at the self-service gas stations. In India they are called petrol-pumps and the attendants here fill up the petrol and take cash, petro cards, or credit and debit cards and give a receipt right there. Do people in the US have to go inside the office and convenience store to pay cash? What if someone just fills and drives off?

True to the company’s name – Intuit, it will have to be something super simple and intuitive. The technology will need to border on AI almost. The software should learn and evolve from the usage pattern of the user.  It will become unique from any other Intuit DW App installed on another phone. Just like every one’s wallet is unique. A basic example is the way an ATM learns your favourite withdrawal amount, the DW would also have to learn these things.

There will be overlapping in the roles of the 3 parties – Can Intuit tie up or strike alliance with any one or all three types of DW partners? Or should Intuit launch its own branded phones? Should Intuit launch its own secure data services like BlackBerry? Should Intuit open retail outlets? Should Intuit go the eBay way and take over banks (PayPal), and telecom (Skype) and add to its existing Merchant setup (Ebay.com)?

Should Intuit create a company that allows merchants to outsource its cashier staff and operations to Intuit? I.e. the cashier, the computer and all handling of electronic transactions will be done by a staff member who is employed with Intuit but sits at the cash reception counter of the store? This will give peace of mind to the stores that they need not worry about the technology and they need not even pay the cashier who handles DW payments and other e-payments. This will certainly cause big retailers and even small jewellers to say yes to Intuit DW payment acceptance sticker being stuck on their door without a second thought; after all they are not just getting a free new mode of payment but even a free staff member. These staff members could be handling Intuit customer support queries whenever they are not busy accepting payments from customers in front of them.

Mobile phone manufacturers are increasingly becoming service providers and merchants (Apple iPhone and iTunes as an example). So maybe in the present scenario, they could be regarded as the fourth major player in the DW concept. These 4 partners will invest in each other. Whoever emerges as the big fish and does it smartly will become the number one DW force.

There are so many unbanked people in the world. Because banks & merchants simply cannot reach out to them in far out places. The wireless broadband, wireless mobile services and wireless DTH TV has effectively removed the telecom barrier for these unbanked people. Now even banking and merchants should be able to follow using the DW concept, or if they don’t then the telecom players will do the banking and merchandising for these villagers and other unbanked people.

For every poor villager in India, China, Africa, Brazil, Russia, to have a bank account, now we don’t need to build millions of bank branches in millions of villages. All it needs it nationwide 3G connectivity, even if cell spectrum connectivity at first and not internet and other bands. The villagers will manage their own smartphones or a combined community smartphone and do their banking and shopping, buying and selling on their own without the need to travel outside their village for miles on a daily basis. Already in India the concept of a community workstation, called e-Chaupals (Chaupals means the village gathering point) are creating a revolution in offering fair rates for their produce (India is 60% agricultural, that is 600 million people who are farmers). Phone Chaupals will drive this concept even further and make it even more accessible and affordable, that even the poorest of poor villages that cannot even afford a computer will be able to have connectivity to the world now. This will need special apps and group banking and community banking apps for the villagers.

There are more mobile phone subscribers in India than bank account holders. 10 million new numbers are added every month. India has the world’s lowest cell rates and the lowest ARPU (Average Revenue per User) which means that it is the biggest growth market for DW. The author predicts that the DW will ironically not originate in explosive growth in the developed markets but rather from the already semi-technologified growth and emerging markets like India & China. There are 4 billion mobiles worldwide. DW has the potential to transform the concept of money in a very short time unlike ever before in human history.

The concept of paying online still seems alien to many people in India and I’m sure many of you will agree about it in your countries as well. An example – my ISP customer care agent called me recently, that my monthly plan is about to expire, they do this every time the plan approaches expiry. Last time they called at least 15 times, 5 times in a single day, each time a different person, and to each I reminded that I will pay the next day after my plan expires and not 1 day before it and I will pay online, as I always do. But the lady kept insisting that she send a person who can collect the cheque or cash (maybe they have personal goals of fulfilling their collection targets). I said the expiry is still 7 days away, I said please check my payment history; I have always paid through the internet, so why do you constantly keep asking about cheque and cash? She asked me simply, “Why do you pay online?” This half irritated and half amused me, especially in the present mind set of brainstorming for Intuit, so I said I get to pay from sitting at my place and then I don’t need to wait for your person to arrive and collect the cash and cheque physically. I said in fact you should give me a discount since I save you all this legwork. She was a little taken aback at my sudden increase in volume and I ended the call saying to please not give me a reminder call again as I know when the time to renew comes when the internet stops working and to please add the fact that I pay online in my account records.

So the thing is that customer care really is not standardised. So many places ask for phone numbers during customer care calls even though it is the first thing they note when we fill up the physical or online membership sign-up form. Customer care always asks for phone, address and other ID confirmation when we call to establish our identity. They do it every time, yet when the time comes for them to note our number to call us or for tech support to arrive at home for visit, they ask the telephone number and address again. These things are given out in registration forms still they do not maintain their data properly. There is the need for a common ID and data system for all customer care worldwide and they should never be able to give the excuse that “system is slow” which is so lame. They need to have proper computers, proper connectivity and proper data bases. DW can solve all these problems in one fell swoop.

Customer support with DW will go beyond voice chat & email and video calling will become the standard. The mobility of DW video calling will allow more flexibility in customer support as compared to the static wired web cam on the computers. Now customers will be able to show the problem instead of describing it. This will utilise both the front and back cameras while calling tech support to ask, what is the reason for that weird icon popping up in the system tray of your computer? The front camera will show your face and you will point your device to the right bottom area of the windows desktop to show the system tray that will be captured using the back camera.

People’s handwriting will become worse by increased use of DW; already people’s memory capacity is taking a hit due to overreliance on Googling any and every thing.

Many older phones could bypass the need for additional processing power for voice, fingerprint and retina recognition by using server software and server based processing. They can dial a number for customer care or interact with IVR and their voice pattern will be verified, they can click their retina picture and send it for identity processing on the server, same way for fingerprint pattern and also for finding out the identity of people who approach them or who they meet by asking them to touch the mobile touch screen with their thumb and then the server will process the data and relay back the identity of the person who is meeting the owner of the DW. But since at its core the DW is a replacement for ATMs and Plastic Credit & Debit Cards, maybe most people will be happy with just using an ATM pin like 4 digit password for managing their money.

A simpler security device could be USB dongles given by different providers like one for your bank, one for eBay, one from your favourite store. These devices, along with the password would help create a more basic yet sturdy security feature. Instead of dongles that you need to carry maybe there could be cheap SIMs or other implantable chips that can be added inside the casing of the mobiles. Already many people own dual SIM mobiles.

Other hardware changes will occur like in future smartphones the display will be based in Virtual Reality VR 3D goggles and glasses. These will make monitors, screens, projectors obsolete. The phone itself will become the joystick.

We also should keep our minds open about the design of the future DW Smartphone.  It doesn’t necessarily have to be a 1 piece. The phone was a 2-piece at invention time, and then it became a 1 piece, now it will become multi pieces. It might be convenient to hold and carry in one piece but maybe by breaking it up into many pieces we will transform the use and convenience even more. Vision – Goggles that act as a screen and are 3D VR display compatible. Sound – the phone speaker and microphone could be like the Bluetooth headset of today, only much smaller, almost hidden inside the ear. Touch – the actual screen for waving over NFC scanners on POS counters will be the size and shape of a credit card, made of translucent material. Taste and smell are many years away. Thought input is many decades away. But with this setup the input could be from the three pieces Vision (Visual Eye Tracking Input), Sound (Voice Commands), Touch Input (Gestures, Swype by Samsung, Touchscreen). Additionally a watch could be the health monitor and life support component. It will be capable of measuring (through a tiny poke into the wrist), temperature, and it will activate in case of high impact accidents and dial 911. Maybe if this tech is further developed the watch could be setup to give the wearer jolts of high voltage if they suffer from epilepsy of cardiac problems.

Will the DW make the SIM card redundant? If you installed a Vodafone app, you would become a Vodafone subscriber, later if you disliked their reception, you could delete them and install the Verizon app. Mobile numbers would be portable regardless of the carrier as it is the number of the device and not the Carrier (SIM card doesn’t exist)

How about changing the 10 digit mobile number to words, or alphanumeric ids, or maybe reduce the amount of numbers to 3-4-or 5 by way of 1-800-MCDONALDS like numbers, so my number would be like 1-800-Karan or more realistically something like 98928-Karan or in other words (98928-52726, as KARAN is typed using the numbers 52726 on the standard keypad) Websites were initially 112.344.242.224 etc. until someone started giving them Words like www.yahoo.com through domains which direct to the above numbers or IP addresses. The same can be done with mobile numbers, at least partially.

Automatic updates and “check marks” on the to-buy & to-do lists based on purchases and visits on the GPS and geo-location apps

Actually with DW merchant cash acceptance is super simple. No special machines like a card swiper are needed. If the card is DEMAT so should the machine that accepts it. The storeowners can simply use a smartphone like the one the customer has and accept payment.

Buying Ringtones, games, wallpapers etc. is a big business. But it is highly unsecure. Also participation in SMS contests through which charge extra money is unsafe. Your cell can be used by anybody to send these SMSes and get your cell charged extra money by the cell service. Even DTH set top box service providers have these contests and anyone can send these SMSes and get you charged exorbitant fees. It is akin to using some enemy’s phone to wastefully dial international calls which cost huge amounts. These purchases will be more secure, improve product quality, their rates will become reasonable and also the product will diversify with Intuit. Ringtone print ads print 20-30 different codes, a different code for each cell service provider and a different code for each song or wallpaper. How are customers supposed to go through so much data for something so simple? The DW will simplify these purchases.

The DW will also become an exchange that converts coupons, store credits, Facebook credits and other forms of value to cash and back. Maybe once this is in place, conversion of currencies and exchange of stocks will also get scaled on the same app. People should be able to exchange coupons wherever the merchant does not prohibit the coupons as non-transferable.

I said in a post earlier that the DW could become the personal and sole net connection that travels wherever you travel. Thus one need not have a different TV connection, different internet connection for PCs and laptops and a different internet connection for consoles etc. 3G and the upcoming 4G technology will give a lot of speed, literally, in the customer’s hand. Thus people should also be able to pitch in their net speeds, the way a single connection is shared by many through a router which beams out the 1 signal, thus similarly a common DW phone or router should be able to beam back in many signals from many DWs to give hyper speed to a common device such as an Internet TV. If 5 friends are sitting to watch a movie and they want to either legally or illegally download a new movie (from Netflix or ISOhunt) then they should be able to do a Captain America like “with our powers combined” combined internet speed boost to the Internet TV in front of them and download the movie 5 times faster than what one connection would do. Thus the movie will get downloaded in 10 minutes instead of an hour or so it takes on a normal high speed connection.

Musicians play on subway stations & people drop in coins, now Facebook and YT video musicians and other artists and content creators would be able to get access to quick tips, donations and payments through Intuit. For payments below a certain designated amount such as $5 the device will relax the security level to minimum and allow completing the transaction within seconds. Offices are increasingly prohibition FB & YT usage, thus the DW will also become the primary source of social networking.

Since the mobile phone as a TV screen is even more personal and targeted than a computer, it could herald a whole new era of ad-supported free premium content. The ads too will be based on your spending patterns and past history through Intuit DW.

Health monitors with watch that connects with the phone and dials 911 case of an emergency.

Why were incoming calls charged in the beginning? Why was the incoming calls charge abolished later? Maybe because the companies had limited network capability in the beginning.

There will be a huge spurt in warehouses as compared to retailers. Retail outlets will reduce, merge, consolidate, and convert the emptied spaces into warehouses and distribution points. Thus less space will be used for display and more for proper storage. Real estate prices will ease. They will become reasonable for people who really need a retail presence in order to start-up and expand their small business. Currently big business holds sway in the retail real estate market; they make deals in bulk which totally side-lines the SMEs and innovative businesses which have better ideas than big bad companies. Monopolies will be hard to set up in the DW economy. True freedom will be nearer. Because now since I don’t need to see the product in order to buy it, many retailers will shut their stores, open warehouses instead and explode their product line up and offerings with worldwide brands. This can be done even today, but for some reason I just feel that a DW based m-commerce will be able to substantially catalyse this process where computer-based e-commerce could not.

Ultimately you will only go out for buying clothes, cars, to dine and to watch movies at the cinema and to go to plays etc. Movies might also start looking more appealing at home rather than cinemas. People already worry about bugs, dirty seats, aids-infected needles, etc. in cinema seats. Maybe movie releases will start happening first on Internet TVs and through devices like Intuit DW before they get released in theatre. People will obviously record and torrent these early TV releases but the money movie producers will make by direct to customer release will balance the losses in cinema earnings because of pirate releases.

Doctors, grocery, shopping, medicine, vegetables, etc. buying almost anything will be possible from an electronic device and paying for it would be most easy through a DW where the receipts are stored and from where you need not enter the loyalty point details as they are already stored and archived. Right now 90% of the transactions happen in the real physical stores. That might completely flip in 10 years.

10 billion coupons are printed and released in the USA every year. The hit rate is only 2%. What a big wastage of paper. In fact coupons need to be eliminated completely. Why should one need to present a coupon in order to get a discount if the store already knows that it has given you a coupon. Prices should be displayed with the discounts already calculated; there should be thus variable pricing for everyone based on their discount levels and loyalty. Instead of marking up and then giving coupon discount, the merchants should simply state the low price up front, customised to each user, depending upon their history, habits & the value that a particular customer has for the merchant. How many times have you tried telling a shop, hey I am a regular customer, give me a discount! Customers are smart and getting smarter, and everyone (almost) knows that the coupons aren’t really genuine discounts. Discount & “sale” offers are a sham mostly, very few merchants really give discounts that are not fake or superficial, I’d like to go by 1 day at least when I do not come across 10 different “sale” ads.

Coupons are made for action/enticing the customer. If one does it shrewdly then they can even get the customer to pay higher, while the customer thinks they got a deal, but in reality they might be paying more than what another similar product from another merchant is worth or available for. With the DW you will see a rival rate right before you pay every time. Price will be king. Promotion will go bust. The 4^th P will become B. Promotions sucks. Branding rocks. Branding will take preference over short-term promos as it rightly should. Advertising will become a lot classier as it rightly should and as advertising creative rightly want.

I have worked at a leading ad agency and I hated sometimes even when people who worked at as reputable an ad agency as JWT behaved. An ad agency work process is a very good example of how work is done by those at the bottom and reaped by those at the top, and this is the way work is done in corporates today. That is the ideal situation where everyone can paid and promoted according to their contribution but it rarely happens that way, especially in an ad agency. So let’s say that everyone in an ideal office had DW. That office would be on where you are permanently employed but function as a freelancer. Your weekly, monthly, daily, hourly and even by the minute income will be linked directly based on the work you have done in the selected payment period. Everything will be budget based. A company gives 30000 to the ad agency based on their initial presentation and projection, for creating a TVC. The agency head business manager allocated 25000 to the Creative Director (CD) for ideating and producing the TVC. The 5k is for agency overheads other than creative (like overpaid client servicing idiots who really don’t do any work but seem to be the bosses). Now either the CD, if he is capable enough, can do the script and ideating himself, or hire a junior. The junior will be told about the amount she will be getting if so and so is done and if her script and ideas are approved. The junior will immediately be given the first actual expenditure for the client in the form of an advance to her DW, since the work actually begins at the bottom. The junior will get paid at every step of the job and the CD can change the junior at every step of the job. Brainstorming, ideating, fleshing out, writing scripts, storyboarding, etc. Maybe on the next job the junior might feel that she did most of the work and the payment she got for the work on the last job was not fair, so she might demand more, the CD can accept, or do it himself, or get another junior, but he cannot fire her. She is permanently employed as a freelancer. The CD can also decide to do the production himself or hire a producer. The producer will take the funds given to him and then work in the same way as the CD of the agency did, he will either hire a director and actors or do it himself. The junior who worked can not only decline the CD but also choose to work with another CD who offers work, even if lesser payment, but since he is more talented and accomplished she will still choose to work with the other CD instead of the first one. If the junior is more successful and gets more payment on the DW with the second CD, the market rate and payable salary of the first CD will decrease since it is now mathematically, logically and through results where people put their money where their mouth is, that the first CD is a n00b. It will lead to a whole new era of performance based promotions where idiots who ass lick their way to the top will stand no chance.

Merchants can buy special POS Intuit DW devices that come hard coded with the required customised software for their business.