TechCrunch recently featured an article by Alex Rampell (@arampell) about why your wallet is going to become the next platform. More specifically, he was talking about how the digital wallet is going to become the ultimate financial platform. “As digital wallets increasingly become the origination point for consumer spending, they will become THE platform for downstream financial services—creating an opportunity for startups and a problem for established players.”
In the article, Alex visualizes the digital wallet as a stack that shows hardware at the top (your phone) and bank accounts at the bottom. He says that the flow is more like a system of pointers that flow downward. In addition, if a business can occupy a defensible position in the stack that allows it to intercept payments, capture and control value, then it will become the ultimate financial platform.
Obviously, the best position in this stack is at the top. Like Alex, many people believe the top is unattainable because the big players have this locked down. However, if you look closely at the diagram I would argue there is an opening. The top is occupied by Apple Pay, Samsung Pay and Google Wallet (Android Pay). But how can any one of these players become the ultimate financial platform when they are segmenting the market in a huge way? In the US, Android represents 52.4% of the market and Apple holds 42.6%. Worldwide Android represents 82.8% and Apple just 13.9%. In addition, if you don’t have the latest version of these smartphones then you are limited even further. The ultimate financial platform can never be Android- or iOS-specific because neither can provide a service that works for 100% of the users in the market. To penetrate the top of this stack, there needs to be a universal solution that will run on any platform.
This universal solution will most certainly be a software product that will run on any smartphone, most likely an app. In Alex’s stack, he breaks up the app and cloud platforms into two tiers. As examples, he shows Starbucks, Uber, Walmart and Target on the app layer. However, aren’t all of these apps tied directly to the cloud layer? Don’t you have to create an account and provide each of these apps with a username, password and payment information that is stored somewhere on a server? Think about it, would you ever walk into a store, hand them your wallet and say please hold this information until the next time I come in? It’s amazing how many people do exactly this online when they set up account after account with all of their personal and financial information. The ultimate financial platform will not be one that works in the cloud and requires the protection of someone else. The ultimate financial platform will be one that puts the user in complete control of their information much like their physical wallets today.
So how does the ultimate financial solution protect the average person if they are in control of their own information? The answer is multifactor authentication. Requiring that a financial transaction can only be completed if the user has multiple things that only he/she controls significantly reduces the possibility of theft. By using the phone as the central payment device, you can immediately add multiple layers of identity protection. 1) Having the physical phone, 2) Unlocking the phones, 3) Unlocking the app on the phone. Biometrics can be added for even more protection. In addition, the information should be encrypted for the user and only be passed in encrypted form for further protection.
Conclusion and the future
Mobile phones are inherently becoming a staple in our lives. We rely on them more and more to handle everyday tasks. We take them with us everywhere and have them with us more often than almost anything else in our life. There are even times now when we have our phone but not our wallet (when we are at home). Alex was correct in his article about the wallet becoming the next platform. I believe the application for this wallet will reside locally on our phones. In addition, we can take this theory even further. As power and storage increase on our phones, they will control much more. Instead of an ultimate financial solution, what if there was a universal data solution? Imagine if much more than just financial information is stored and controlled locally on the phone. Potentially, we could store our entire health records and other personal information that is currently being kept by someone else. What if our phones could authenticate who we are to log into accounts rather than using usernames and passwords? In this digital age where we seem to be losing more of our privacy every day, wouldn’t it be great to have a universal data solution that puts the user back in control of their information?
Paydunk is a mobile app that is positioned to become the ultimate financial platform. With Paydunk’s patent-pending technology there are no usernames, no passwords and no accounts. Everything resides locally on the phone encrypted within the app. The user is in complete control of their information at all times. The app is currently available for Android and iOS but can run on any platform. For e-commerce sites, Paydunk can interface with any payment gateway; it will even work with PayPal. For in-store payments, Paydunk is capable of communicating with virtually all of the new POS terminals without using NFC technology. In the future, Paydunk will handle loyalty cards, peer-to-peer payments, ACH, gift cards, recurring payments, bill pay, rewards programs, on demand loans, data and more.
Paydunk uses multifactor authentication together with the latest encryption technology to provide users with a universal data solution. With Paydunk, the user maintains complete control of all of their sensitive information.