There are several enabling components that are required across all personalized transactions, whether they are for finance, retail, health, education or government. The components that should be considered by corporates and governments while developing a payments infrastructure are:
- The ability to aggregate disparate domains
- Allow transaction over all channels and all devices
- Ability to support transaction initiated by users as well as their designated IoT devices
- Secure communications and data
- Leveraging data for analytics
- Manage identity and privacy
- Issue various tokens and settle these tokens in a closed loop or open loop environment
The above-mentioned components might look simple; well-known to many payments companies and advisors, but very few have thought of building a solution that consists of all these components. If all these components are used, then we will surely witness a high volume of cashless transactions irrespective of sectors or regions. When stacked in a system, these components might turn into an infrastructure of infrastructure.
This is what is known as ePlumbing. The term has been coined by Mehul Desai in his new book August of Money – The Quest for Cashless Society. The word e-Plumbing might look fancy, but has a deeper meaning. Just like the plumbing for a durable building that supports basic amenities as well as elaborate luxuries, ePlumbing is for an omnicommerce, socially networked flat world, which needs to support everything from financial inclusion to stock trading to smart contracts to clinical trials to electronic voting.
Just like the plumbing in a building, if ePlumbing is not done properly in a payments system, there is a high possibility that the infrastructure would not be able to stand for a long time. ePlumbing will be the utility layer upon which usability will be built.
Estonia is a tiny country next to Finland in Northeastern Europe. Back in 2010, the country planned to be a cashless society. In 2015, Estonia had already moved close to a cashless economy. The government of Estonia is labeled as the world’s most tech-savvy government. From finance to healthcare to government, all services are available online and related transactions are conducted electronically. Estonians can file their taxes online and get their returns within two days, their healthcare providers can access patient’s medical records electronically, and they can electronically vote for their parliament as well European Parliamentary leaders.
With almost 100% coverage through its identification system, data between different systems moves seamlessly and constantly in the background. Whether it is syncing employers’ tax records with their employees’ individual filings or an individual’s tax deductions on mortgages, all this transactional data is constantly updated. From a privacy standpoint, the citizens own their data and can control external access with granularity. In the event the government needs to review an individual’s records without seeking prior permission, for example, for national security reasons, a log is created allowing the citizen to review and potentially challenge any unwarranted access.
Arguably, with a population of 1.3 million, Estonia is more a city than a country. Nevertheless, what is interesting is how they have designed their entire system literally from scratch by focusing first on identity and related security, and then enabling authentication across all public and private services leveraging a common infrastructure.
The key to the adoption, penetration, and growing usage of the Estonian e-government services is basically the concept of ePlumbing.
August of Money – The Quest for Cashless Society says that the building blocks are in place. We are at the midpoint of a 20-year cycle. In the last ten years, we have found out the components that are required for ePlumbing; the next two-five will be about leveraging the ePlumbing; the following five-eight will be about ubiquity. The book has detailed information about all the components related to ePlumbing and will be available to readers shortly.