August of Money: The Quest for Cashless Society

By Mehul Desai

In the first of this new multi-part series, August of Money - The Quest for Cashless Society, author Mehul Desai brings together his unique perspectives as an entrepreneur and investor in the exciting world of FinTech, where technology-enabled emerging financial services are fundamentally changing the way consumers relate to money and transactions. Section I, covered in this edition, connects the dots between the various considerations in the road to cashless and lays the foundation for the remainder of the book, which is also outlined in this edition.

The August of Money examines the ongoing evolution of cash towards a true Cashless transaction environment. Based on the premise that while cash has always been a state-driven public utility whereas cash-replacement is a private endeavor, August of Money presents a different approach towards building a true Cashless Society, connecting the dots between the advent of eCommerce, Big Data and IoT, proposing the building blocks for the Utility and Usability, and speculating on how the ePlumbing for Cashless will impact everything from socioeconomic growth to national security.

August of Money is more than a book. In partnership with LTP, the world's fastest growing destination for FinTech news and insights, it is a platform for dialogue, engagement and inspiration to take concrete strides towards a cashless society. The journey starts here: http://LetsTalkPayments.com/AugustofMoney. Visit this page often for updates on the book, for an optional interactive multimedia edition and to stay tuned to additional content from the author and other partners who are co-explorers in the cashless journey.

• Language: English
• Publisher: Mehul Desai
• Release date: Sep 10, 2015
• ISBN: 9780996817004

Mehul Desai

Let’s Talk Payments (LTP) was launched in August 2013 as an information resource for the industry. Since then, LTP has reported on industry news every single day, and continues to be the fastest growing payments and digital commerce news destination globally. LTP​ has built the ​news and insights ​platform ​for both consumers and business readers, bringing deep research ​expertise to news reporting and analysis​. With subscribers spread across the world in various segments of payments, financial services, banking and FinTech, LTP has grown in scope and depth to cater to the needs of its readers. LTP provides industry insiders and enthusiasts a knowledge platform for news and insights. It helps marketers and entrepreneurs with a credible media channel to reach out to an engaged audience. We delight our growing and diverse set of subscribers every day, with analytical depth and comprehensive coverage delivered simultaneously. The new LTP, launched in March 2015, has the tools and building blocks to enable collaboration amongst entrepreneurs, investors, and strategic partners across the payments and commerce value-chain, bringing global expertise and scale to solve thematic challenges. This new platform is the perfect blend of insights, interactivity, and engagement to serve not only our subscribers, but also our partners and supporters. LTP is truly a shared resource for the payments and digital commerce community! LTP is built, run and managed by a global team based in New York, Bangalore and Charlotte. It was conceived and founded by Amit Goel and Aditya Khurjekar.

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Preface

What do Cowry-shells, Shekel, Dinar, Krugerrand, and Apple Pay have in common?  They have aspired or are aspiring to be the global commerce enabler of choice. Some of them achieved significant notoriety and some of them went on to set the stage for the monetary system that has now become the flat world’s lifeline. The jury is still out on the last contender.

The cornerstone of any successful transaction system is its ecosystem. The more robust the ecosystem, the more stable the system; the more diverse the ecosystem, the more scalable the system; the more flexible the ecosystem, the more sustainable the system.

All successful payment providers know this well.

Yet, every new contender seems to forget these simple guiding principles. They seem to believe themselves to be the disruptor, the messiah who will free all consumers from the tyranny of inconvenience and insufficient value addition. They all seem to be of the opinion that simplicity will save the day. They all seem to be convinced that their gravitas is so powerful that the new world order will be redrawn, with the entire universe revolving around them. They all seem to believe that if they build it everyone will come.

One exemplary case study of such hubris is Softcard, a joint venture between three large US telcos – AT&T, T-Mobile and Verizon. Softcard (which on formation was called Isis, and was rebranded in 2014) was officially announced in 2010, although rumors of such an unprecedented initiative were progressively getting stronger over the years leading up to the formal announcement.

At the time, and rightfully so, Softcard was heralded as an innovator, taking a bold step towards building an inclusive and comprehensive ecosystem, establishing a much needed foundation for consumers to securely conduct mobile commerce and payment transactions seamlessly in the virtual and real world.

When the initiative was first launched by the large telcos its most endearing quality was its humility. It rightly so had identified the lack of a single scalable model around the world that it could potentially adopt, and managed to convince its own rank and file that for once the mighty infrastructure providers will have to figure out how to get everyone to come before they start building it.

It rightly so was focused on building the ecosystem before the brand.

Ironically, the day the telcos launched the new entity – Softcard – the priority diametrically reversed to building a brand first. Humility was replaced with hubris, and a generational opportunity of revamping the personal transaction environment in the US as well as establishing a global reference was lost.

Looking back we can give the Softcard model credit for ushering in a heightened level of sensitivity worldwide around the need of building the right ecosystem for mobile payments in particular, and by extension omni-channel digital commerce or as popularly referred to as omnicommerce, to scale and flourish.

With that said, the trick is to enable the ecosystem without being stuck in the middle. Humility always trumps hubris.

Apple Pay, which is already in market, seems to have picked all the right components and more importantly seems to be staying away from the contentious ones. While it is still early, the Apple Pay model could very well now become the reference for enabling ecosystems worldwide, pivoting (select) OEMs from the periphery to the center and effectively curtailing the digital ambitions of legacy providers.

Google acquired Softcard earlier this year, and announced Android Pay. Samsung announced Samsung Pay, its own payment solution and ecosystem. The merchant consortium in the US – MCX – will be unveiling its own solution soon. PayPal is now largely viewed as an incumbent, along with the conventional networks such as Amex, Discover, MasterCard and Visa. And as we speak, there are two starry eyed romantics huddled over a table in a coffee shop in Silicon Valley, who are convinced that they will disrupt the payments industry, going where no man has gone before.

There is never a dull moment in the world of payments.

At a personal level, the Softcard announcement in 2010 culminated more than a decade’s painstaking work of evangelizing the need for ecosystems to drive the adoption of mobile payments. It also help put the company I co-founded, built, and ran till 2011 – C-SAM, Inc. – on the map, further exalting its credentials as a marquee global technology provider for secure electronic transactions.

(Note: C-SAM was acquired by MasterCard Worldwide in 2014. C-SAM’s people and products continue to play an integral role in the secure transaction space, now as part of MasterCard’s digital commerce offerings worldwide.)

I co-authored a book, The March of Mobile Money, which was published by Collins Business in 2010. The March of Mobile Money examined the forced convergence, by lieu of mobile wallets, of three large and powerful industries – telecommunication or connectivity providers, banking or payments providers, and retail or service providers.

The March of Mobile Money traced the evolution of these three industries over the past several decades, the driving forces behind the mobile wallet and its inevitability, and the socioeconomic implications of billions of mobile phone users securely transacting everything from financial and retail services, to healthcare and government applications.

Over the past few years we have witnessed an increased frenzy in the mobile payments world. Not a day goes by without an announcement of a new product or service offering, from existing players or recent entrants, from incumbents or potential disrupters.

While I still bump into someone every once in a while that admonishes me for not thinking about putting a credit card on a cell phone, for the larger part the proverbial cat is very much out of the bag. There are large infrastructure providers gradually evolving the necessary foundation for seamless and ubiquitous digital commerce, and there are small upstarts trying to identify the killer app that will capture the imagination of the masses.

Like many other infrastructure-heavy industries, the payments industry is difficult to disrupt. That said, over the years practically every credible service industry that has gained a captive customer base, measured in terms of foot-traffic or in terms of eye-balls, has made a serious attempt to move to the center of the payments ecosystem.

The incumbent players or the more traditional providers in the payment space, as well as the so called disrupters operating at scale and leveraging their points of strength, all seem to now have the fundamental building blocks in place. They all are sensitized to the notion that the next big challenge is to drive adoption and scale. While some continue to focus on building vertical solutions, for the larger part the hunt is on for the silver bullet that will help create a sustainable secure transaction ecosystem.

In the August of Money I build upon the concepts and trends from The March of Mobile Money, examining the ongoing evolution of cash to cash-replacement and further on to a true cashless transaction environment, outlining some of the concepts that may help such an environment, and finally speculating about the pros and cons of a cashless society.

The August of Money builds upon the thesis that while cash, which throughout the book is used to describe money in physical form for the purposes of transacting monetary value, has always been a state-driven or public utility provided to better the lives of its citizens, cash-replacement has largely been a private endeavor.

That simple yet profound