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Somewhere in Caracas, Venezuela, the owner of a small cigarette kiosk takes home his day’s earnings in big plastic bags. Due to excessive inflation, the local bolivar is so devalued that people cannot carry money for their needs in wallets anymore, resorting to filling entire handbags or backpacks with cash. As a result, electronic payments have become very common. At a time when we prefer to use our smartphones for almost everything, mobile wallets are emerging as a convenient solution for payments. If a smartphone is like one’s ever-faithful shadow—fusing together everything from work, news, entertainment, communication, and more into one’s palm, the ease of extending its functionality to making purchases and paying bills can’t be far behind.

A new set of opportunities

Mobile wallets are gaining acceptance with increasing smartphone penetration, and also the thrust within certain economies to transition to a cashless mode. In the US, the usage of mobile wallets has been on a steady rise, and about one in six consumers have used a mobile wallet. In India, with the government’s demonetization move, mobile wallets received a big impetus—in the initial few weeks of demonetization, one million new e-wallet users were being added every day. Clearly, I see it poised to grow further, which signals larger behavioral and transactional changes in times to come.

The biggest advantage of mobile wallets is the convenience they enable. Being able to purchase something simply in a few clicks or paying a bill through one’s phone is refreshing, especially for the average person who spends increasing amounts of time on their smartphone. Mobile wallets also allow small vendors and retailers to swiftly keep up with the changing economic and political circumstances and avoid losses, as setting up credit card machines can be an expensive undertaking for them.

In Asia and several developing economies in general, a large proportion of the population is bypassing traditional banking methods and jumping straight to digital transactions via mobile. This is largely because on the one hand, the banking infrastructure is inadequate, and on the other, the quick growth of the mobile industry means that people across income categories can use a mobile phone and access the internet. For instance, in India, about 60 percent of users have accessed the internet for the first time through a mobile phone. In many western countries, there are already a variety of well-established payment options, and here, mobile wallets can ensure growth only by offering discernible advantages over other payment methods so as to convert more users.

Security is paramount

So while different economies are all turning their attention to mobile wallets, there are still some hurdles preventing a wider embrace. At the level of usage, the main barriers are payment fees or the absence of incentives, unstable data connectivity, and a lack of interoperability that means transactions are less seamless than desired. The biggest challenge though is security. Many smartphone users are reluctant to adopt mobile wallets for they don’t trust their financial details to remain safe through the process. Conditioned by previous financial habits, they are unwilling to get past this mental block and overcome their doubts. Therefore, strengthening the security of transactions on mobile wallet platforms as well as user identities needs consistent attention. For, as adoption has grown, so also have new techniques for phishing and identity theft. The first key challenge for mobile wallet providers will be to stay ahead of threats, and secure transactions and protect user identities through enhanced safeguards.

There are also systemic challenges that hinder adoption, even as the goal of cashless transactions may be similar across differing economies. Lack of smartphone usage in rural or lesser-developed areas, unfamiliarity with technology, and financial illiteracy are very real factors, and no transition to a cashless economy can be complete without adequately addressing these problems. In fact, these socio-political specificities require a larger push from the ecosystem they are rooted in by way of orienting financial provisions and enabling access. Adequate awareness and fair access for low-income communities can help in increasing adoption. Awareness also needs to be accompanied by genuine grievance redressal means in the case of loss or theft.

Our longer journey

Coming back to mobile wallet providers themselves, the second key challenge for them is keeping pace with user habits and expectations. Keeping the payment process as simple and seamless for the user ought to be the continuing attempt. Further, empowering mobile wallets to do more for the customer by integrating various services, can improve loyalty by building a stronger dependence.

Do we see more alternatives to cash payments evolve in the future? On this forward-looking journey, it is worthwhile to consider this. Mobile wallets are a solution today, but may not be the long-term solution, as user habits, and expectations evolve. Fundamentally, users will prefer payment mechanisms that further reduce effort, while keeping a focus on security. Does this mean more fingerprint-enabled or biometrics based platforms? As per Juniper Research based in the UK, by 2018, more than a third of mobile wallets will feature contactless payment. I believe providers can get this right if technology intuitively keeps up with the changing nature of financial transactions while balancing openness within government and financial institutions with users’ evolving requirements.

Upinder Zutshi

Upinder Zutshi as Managing Director & CEO of Infinite is a very unconventional leader, and has nurtured the growth of infinite with a very hands-on-approach. With his remarkable leadership, Upinder has defined the strategic direction of the Company, making Infinite’s revenue grow above industry average. He has been instrumental in setting the vision for Infinite to be positioned as a Global Service Provider and moving the Company up the value chain by focusing on differentiated services and product based offerings in a non-conventional engagement and business models.

Under Upinder’s leadership, Infinite has grown to be in the Nasscom Top 20 IT providers in India with a revenue of US$ 255 Million in FY 2013; 5000+ employees worldwide, been named as Top 5 employers in India by Dataquest – IDC, Forbes Asia 200 Best Under a Billion Company in 2012; Top 10 Global Telecom Outsourcing Providers by IAOP and has been recognized as technology thought leaders in the emerging areas like mobility, messaging and analytics. He spearheaded the IPO of Infinite, which was one of the most successful IPOs in 2010, with a historic opening where it was over-subscribed manifold in a stock market where the giants were struggling through a global economic-crisis.

Upinder has over 28 years of experience in initiating and establishing startups and building an efficient management team under his guidance. His empathetic style makes him a very popular leader amongst the young and dynamic employees of Infinite. His leadership style encourages entrepreneurial culture that is goals driven, based on respect for people, freedom of thought, expression and action along with globalized business processes, practices and organizational structure that help create transparency and drive accountability within Infinite globally. Upinder realized early on that the company needed a winning team to make the Infinite vision a reality. His leadership is evident in the progressive work environment at Infinite, where qualified and experienced people bring depth and maturity while retaining focus on flexibility, innovation and integrity which are the core elements of the entrepreneurial DNA of the organization.

In his formative years, he has worked extensively in US, Europe, Middle East and India, with reputed companies holding key leadership positions. A greater part of his career, post his first job at CMC Limited, has included experience in building early stage companies, setting-up start-up ventures and developing them into growth organizations. Prior to joining Infinite, Upinder was, for a period of six years, the Chief Executive Officer of Velocient Technologies Inc., a digital consulting & IT services company in the US. For five years preceding this, he was the co-founder and Vice President at Eastern Software Systems (ESS) Ltd., a leading software products and IT services company and was responsible for setting up and running the middle-eastern operations of the company. Upinder started his career with CMC Ltd., where he spent eight years holding various functions in sales, marketing and program management.

Upinder holds a Mechanical Engineering degree from the Birla Institute of Technology & Sciences (BITS), Pilani. He is an avid golfer and a photographer.

Blogs by Upinder Zutshi