New Delhi: Sam Pitroda and Mehul Desai’s book, The March of Mobile Money: The Future of Lifestyle Management, charts almost two decades of work on digital wallets. Despite the ability these wallets have to reduce costs and extend banking services, the book narrates how narrow commercial interests have often sidelined their development. But now, the authors say, mobile connectivity holds the potential to revive the idea.
Push, play, pay: In his book, Pitroda expresses the hope that the advent of ubiquitous mobile phone connectivity will finally make digital wallets a scalable success.Ankit Agrawal/Mint
Pitroda, who patented the digital wallet concept in 1994, spoke in an interview about why he wrote the book, privacy concerns, how India is uniquely positioned to benefit from mobile money, and how risk-averse entrepreneurs are wasting our youth demographic. Edited excerpts:
Why did you choose to write a book on mobile money? And why at this time?
I think mobile money is becoming a hot topic. It has been in the public domain for a while.
But it never really took off. Now I think we are at a tipping point when it comes to mobile money. Many people are looking at mobile money solutions that have scale. The world over a lot of small experiments have been tried without achieving scale. Mehul and I think that now is the right time to look at it seriously.
In the book you use the idea of lifestyle management to show the impact mobile money can have on retailers, bankers, telecoms and consumers. Explain this concept.
Imagine if you go to a typical restaurant or a cafe today. You will notice that when people go to the restroom, for instance, they often leave their mobile phones behind on the table.
What they are saying is: Look, this is me, I have arrived. It is a statement. The phone they leave behind is a reflection of who they are.
The style, the size, the brand, all are also definitions of who the individuals are. Really the phone is beginning to define your lifestyle. It contains the music you listen to, your contacts, your messages and, ultimately, it will contain your money.
It will soon contain your credit and debit cards, your shopping habits.... We believe, over a period of time, more and more of what you do everyday will be housed in your phone. It will both contain your lifestyle and give you the tools to manage it.
That is what it means. And that is why the mobile phone is important.
Early on in the book you talk about how merchants have begun to evolve and will continue to do so. You say how a large part of this evolution is having access to the spending behaviours of consumers and being able to profile them. This is exactly the sort of thing privacy advocates are afraid of.
I think the issue of privacy, and piracy, is of great concern to a lot of people, including consumers.
But no matter how you look at it, a lot of information is already in the public space.
When you take a credit card and conduct a transaction at a restaurant, or buy a pair of shoes in a shopping mall, you leave a trail behind. You will leave this trail, and this trail is largely in the public domain.
The real question then is how is this information being used. Who uses it? And if someone is accessing this information, what benefits do you as a consumer get from it?
If you get benefits from sharing information you wouldn’t mind doing it. And vice versa.
The whole idea of information technology, by definition, is to bring about sharing, openness, accessibility, connectivity, networking and, overall, democratization and decentralization. So you can’t be part of this information culture and then try to hide and protect information.
How ready are Indian retailers, banks and merchants for mobile money? Do they even understand the idea of mobile money and lifestyle management?
I don’t think they understand it. But not just in India. I don’t think companies anywhere get the idea and the benefits of allowing people to have mobile money or digital wallets.
That is why it has taken such a long time. Everyone looks at this from their own little tunnel vision. Banks wants to sell financial services. Merchants want customers. Telecoms want more and more traffic.
No one is thinking of what the consumer wants. Consumer wants convenience, flexibility, reliability, ease of use. The reason some early experiments failed was because they took one little vertical and tried to implement using cellphones.
But consumer is saying: Look! I want my leather wallet metaphor. I want everything in my backpocket. I want to add MasterCard, Visa, Amex and cash all digitally to my wallet. Give me that flexibility. Don’t ask me why!
So now you can’t tell the customers pay like this or pay like that.
In your mind what does this ideal digital wallet look like? If it were up to you how would you design and deploy this?
It has been in my mind since 1994. I want a credit-card sized device which has an LCD display. With a touchscreen. I push here it turns into a Visa card. I push here it becomes a MasterCard. I push here it becomes a receipt. I push somewhere else it become a movie or train ticket. Now all this must be fitted into a mobile-phone sized device. But it is complicated. Each card must have its own security.
All these companies—retailers, bankers and merchants—must operate on common standards. Which is the biggest challenge.
You describe several disruptive changes and disruptive technologies in the book. What prevents our companies from being that adventurous? They usually appear terrified of disruptive change.
I think most of the entrepreneurs in India take the comparatively easy route. They are not innovators in that sense.
They see if something has been tried abroad. And then they will try it.
But I think things will change because of our young consumers. Kids in India are early adopters. They are as smart as anyone abroad. Give them any toy and they will figure it out instantly. We are just not responding to this domestic opportunity.
One thing you don’t dwell upon too much in the book is the role that the government can play. Given that bankers, merchants and telecoms have historically shied away from standards and consensus, perhaps the government could force them to cooperate?
I don’t think the government has such an important role to play. The corporates have to step up.
But there is one aspect to this which is India specific.
And which is why government should do everything it can. We have a huge number of unbankables—poor people without access to banking facilities. If we can send them money on their phones we can reduce transaction costs and reduce leakage.
Why can’t we pay NREGA workers directly on their phones?
How far away is India from seeing the cooperation required to make mobile money possible?
Sadly, we are very far away. But it is inevitable. Mobile money has tremendous potential. However, it depends on everyone coming together and slightly broadening their viewpoints.
But in less than three years I see people owning digital wallets on their phones. For sure.