MANAGEMENT OF TECHNOLOGY &

INNOVATION

ASSIGNMENT – STRATEGIC TURNING POINTS

DIGITIZATION OF MONEY & E-WALLETS

MONEY

One of the sweetest word to materialism,

however it’s not something that came into
form in this century or even the previous.
Barter exchanges dates way back to many
prehistoric eras, they say as early as even
100,000 years ago. There is evidence that
suggests that commodity money came into being, a concept of money developed across
cultures. One of the earliest forms of money was shell money and as history probably states
the earliest form of gold & silver as a medium of money was used
by the Lydians, people from Anatolia, which were not purely metal
but stamped as well for value. In early forms, receipts for valuable
metal deposited with large merchants, were also generally accepted
as forms of money. The Song Dynasty in China were perhaps the
first documented use of paper money which evolved from
promissory notes known as “JIAOZI”. Thus was the evolution of
money which was formed as a medium of exchange and was
accepted as for payment of goods as well as payments of debts,
between people, merchants, companies and countries across the
globe, with many countries over the period of their history creating
their own forms of money, currencies of the nations of the world. The important thing about
money was it had to fulfil several defining characteristics – durable, resistance to counterfeit,
it had to be a legal tender, it had to be divisible, it had to be portable and most important
liquid as it fulfilled key functions of being a medium of exchange, an ability to track its
value, it can be held in physical or in a form that can later be exchanged for goods or even a
service at a value, it can be used a promissory pay or a deferred instrument while still bearing
its original utility.

Safe instruments of exchange have been carried around by people in various ways but they
have had their set of challenges and were mostly physical in nature. Digitization of money is
not a very old phenomenon and is about two decades old, and is associated to Coca Cola
when in 1997 they launched a few vending machines in Helsinki where customers could pay
via Text message, you could classify this activity as equivalent to the modern day use of
digital payments, although this may not 100 % comply to be a digital wallet process but this
is earliest form of use of digital for payment. Very soon this concept took various forms and
the phone became stronger as a medium to push the use of technology for payments, mobile
devices were the strongest use of medium for these technologies and the early uses included
movie tickets, ordering food, travel & hotel stays. In less than 10 years of the initiation of the
concept of mobile devices for payments over 100 Million cell phones users, had used their
mobile devices for making one or more purchase.

Google in 2011 was the first major company that took approach
of launching a mobile payment technology to the public, and this
was done using the process of an application which could be
downloaded on an Android phone, then, and was aimed at
clearly its ambitious and successful attempt to replace the
traditional credit cards with phones using a special chip with
Near Field Communications (NFC) technology. NFC technology
is contact-less communication technology that’s based on a radio frequency and it is a simple
exchange of communication or data between two devices through a simple touch gesture
between two devices. Google at that stage was working Visa, American Express and
Discover cards to make it available on future versions of Google Wallet. The service was
initially launched as Android pay and four years later was launched as Google Pay. Ever
since with multiple technological advancements companies like Apple Pay, Samsung Pay,
GrabPay, Lazada Wallet, PayPal, Touch n Go, Paytm and many many more followed.

Lets take a look at early estimates of 2020 looked like, after completing its second decade in
debut

- 2.1 Billion Users

- Up 30 % from 1.6 Billion users in 2019
- Paypal was aimed at being the market leader with Alipay right behind
- QR Code a leading and emerging form of contactless paying
- NFC technology to continue playing a dominant role
- Not just banks, or contact less giants even retailers will enter the foray firmly
- Reach will be global and value cut across various segments including peer to peer pay
applications like Venmo
Let’s take dive into understanding in the world today, where the advent of payment through
wallets is making everything digitized. It is imperative to understand E-wallets,

Defining E-wallets: Most popular form of understand the concept of an E-wallet is that it is a
digital wallet. A digital wallet where you keep money in it and the same can be then used for
purchase of goods and services, and the same can be done whenever and from the comfort of
any space when you need to buy something. The current concept of an e-wallet is that it
resides and created in a mobile device and the same can be used for E-payments, the same is
possible as one can link their existing credit cards or bank accounts using the e-platform and
create your e-account and the same can be used to make payments on various websites.

Whereas a mobile wallet is more advanced versatile application that includes mobile
transaction, as well as other items one may find in a wallet, such as membership cards,
loyalty cards and travel cards. (Shin, 2009)

Having had a glimpse of understanding what a E-Wallet is and its utility we can now with
great comfort say that using digitalization and more successfully the mobile phone with a E-
Wallet we can not only access or but also the purchase of every service and have the ability
to buy any product using one’s mobile devices, mobile tablets, etc. On the success of E-
wallets and its invention, a lot of credit is has to be given to the need of carrying more than a
physical wallet & its security and also to the mass available of computers and smart devices
that has created a huge impact on the otherwise conservative financial services. The current
scenario is at that any person at the convenience of space and time can simply log in using
either ones computer or by using a secure app on their mobile phones, a person can with ease
access his financial accounts and post the same use his access to review his financial status or
execute financial transactions using his banking/ credit card credentials which are safely &
securely placed in his E-Wallet. The advantage is not merely for the person executing the
same but also for the retailers owing to the ease of remittance and receipt of money in the
transaction. This pace allows the retailer to immediately process the order and commence
dispatch, the benefit it holds for the person executing the digital payment is that no
confidential information ever is shared with retailer. There was a point when credit/debit
cards seemed irreplaceable not long ago but now not only the details of one’s financial data
but also one can store all details of the plastic money and very soon the requirement of these
plastic cards may be of the past and they may soon, seem to fade away due to arrival of the
digital money. The advantage these digital services offer is that they help to save time for all
users by ensuring services can be completed in a single touch. What has happened over the
last two decades by the introduction of digital wallets, has led to making a huge positive
impact on the offering of financial services as today.

What is happening today and that there is an inevitable and growing trend of financial
transactions by using mobile phones or a mobile tablets, so much so to believe that we are
probably at an inflection point on the use of digital financial transactions, and this will
continue to grow over the next period to come.

- There is data by World Bank suggesting that there is a rise in bank account usage in
India up by 227%

- There are more than 79% people with bank accounts in 2017-18 in the country now as
compared to there being 35.2% in 2011.

- In India today more than any segment it’s the lower middle-income group usage of
bank accounts has risen by 200%.

- Before the boom of digital payments, a decade ago there were only 7.48% of the total
population were using the internet and now almost a decade later the usage stands at
41.1% or a 549% rise.

- E-wallets and internet dependency is a major focus in the Government of India’s 2008
Second Administrative Reforms Commission

E-wallets over the period of their growing use have also been growing more & more secure
over the years and ease of use has become a hygiene today, and numerous security features
are now available. One can secure each transaction made by the E-wallet and can disable
them should there be any tampering. Security on the wallet can be applied by the requirement
of a password before the display of any protected cards or financial information in the wallet
and also keeps the information encrypted and safe. Now E-wallets have both a technology as
well as an information component, hence the applications and software’s that are used in this
process have the ability to provide encryption, a key for ensuring the safety of data and actual
transaction, and the security to execute the transaction as well. E-Wallets come in two forms
both for the user as well as the retailer, a feature that’s saves it on the client side as well as
another on the server side which is called the thin wallet on which the data that is stored is a
database of the user inputted information. While on the user side is more financial related
data on the server or retailer side its information like shipping address, billing address,
information about the user (based on type of transaction and requirements of information if
any by the retailer) and payment methods.

Some of the benefits of E-Wallets that have cropped over the period of their use in the last
two decades are

- Transaction of money securely across the globe – Send & Receive – Universal
Banking
- Number of transactions are unlimited however amount for each transaction can be
limited
- One can schedule them as per convenience as well as cause them to occur constantly
over periods
- Mobile devices can be the convenient and preferred option along with mobile devices
as well as computers
- These services are now being secured and available with previous regular processes –
Master Card, Visa etc
- Added security features include – biometrics, pin enablement, passwords, dual or
triple security levels with limits predefined – including notification by email or sms
- User provided control to ensure the highest degree of satisfaction on security
- Owing to simplicity and pace, gratification or receipts are equally fast & secure
- E-Wallets can be reloaded with monies from multiple sources of your financial web
or structure with security levels varying for each
- Since E-wallets preside over financial information, the need to share banking
information is now not required

The security feature rule for making data encrypted is called DRE (dynamic rule encryption)
which has the ability to protect the data by encrypting the same using dynamic rules with a
process underlined for authentication. Apart from DRE there are also two main systems for
transaction security namely SSL (Secure Socket Layer) & SET (Secure Electronic
Transaction).

SSL – a much widely used process for to establish trust between online sellers and buyers,
almost a 90 % share on the security process
SET – Complex process, requires specific software, high level of security requiring digital
signatures and digital certificates, lesser of the two in popularity

There have been significant digital innovations across the different areas within the financial
sector

- Service for Payment – Mobile money, more secured overlay of payment processes,
distributed ledger technology
- Credit Appraisals – Using data available from payment apps and e-commerce, Social
net
Appendix & References

https://www.pwc.com/gx/en/industries/financial-services/assets/pwc-global-fintech-report-
2019.pdf

https://www.cbinsights.com/research/report/fintech-trends-q4-2019/

https://findexable.com/wp-content/uploads/2019/12/Findexable_Global-Fintech-Rankings-
2020exSFA.pdf

https://www.theguardian.com/technology/2011/sep/19/google-wallet-available-public

https://en.wikipedia.org/wiki/Money

https://www.theguardian.com/technology/2011/sep/19/google-wallet-available-public

https://sociable.co/mobile/evolution-ewallets-history-benefits-withdrawals/

https://www.retaildive.com/news/21b-consumers-will-use-mobile-payments-by-2019/520652/

https://www.pwc.com/gx/en/industries/financial-services/assets/pwc-global-fintech-report-
2019.pdf

http://www.ijrrr.com/papers/8%20E-wallet.pdf