The digital wallet trend appears to be unstoppable. According to a recent report by the Hong Kong Monetary Authority, the number of P2P payments in Hong Kong has grown rapidly, hitting a record HK$537 million in total transactions in the fourth quarter of 2016. In fact, the report reveals that the total number of stored value facilities (SVF) accounts in use in Hong Kong has reached nearly 40.5 million. Or, to put it another way, Hongkongers already have an average of 5.5 e-wallets each.
And Hong Kong isn’t an exception. With more banks and payment service providers promoting digital payments across the region, the pressure is on for the technology industry to respond and deliver on the promises of secure and convenient payments.
The key to e-cash to success
There’s clearly every reason to think that digital wallets will soon be as ubiquitous as the mobile devices they live on. But for Hong Kong, or any other city, a future based on digital wallets depends on two things – seamless interconnectivity and robust security.
That’s because even a simple task, such as buying coffee, requires direct interconnection between service providers. And, in order to support high-performance transactions and ensure customer satisfaction, that same well-connected ecosystem must also be as secure as possible or consumers will lose confidence.
E-wallets growing steadily stronger
In fact, security, which used to be a key concern, is fast becoming a strength. Losing a digital wallet isn’t like losing plastic or paper money – restoring your wallet to a replacement mobile phone is usually a simple process. You don’t even need to cancel credit cards because you can remotely wipe your lost or stolen phone.
The industry has also developed numerous technologies and techniques to prevent hacking or unauthorized use of digital wallets. For example, tokenization replaces sensitive data with a token, which can be used by a consumer to access sensitive account numbers without exposing them on public networks.
Biometrics, which use physical characteristics that are unique to individuals, such as fingerprints, iris patterns or facial geometry to ensure safety, is also proving its potential. And multi-factor authentication that requires users to present multiple pieces of evidence about their identity, such as a code from Google Authenticator or a physical key like YubiKey, before authorizing a transaction, is also an effective tool in the battle to safeguard digital money.
Indeed, in many ways, an e-wallet is now safer to use and far more secure than the traditional leather variety, which was prone to accidental loss and purposeful pickpockets.
And the situation looks certain to stay that way, as each layer of protection – from in-depth authentication to biometric identification – is continually updated to keep ahead of a constantly evolving threat landscape.
One of the key success factors of digital wallets is seamless interconnectivity that makes payments smooth and easy. But making that happen isn’t easy with traditional technology. That’s because every link or connection with any third party has to be forged anew each time a vendor or partner is added to the payment mix.
Mobile network operators, financial institutions, retailers, and anti-fraud platforms are just a few of the components that need to collaborate in real-time to execute a successful digital wallet transaction.
Companies in the digital wallet space also have to be as close as possible to their partners and the array of digital wallet users.
Achieving this connectivity and proximity takes something special – a commitment to an interconnection-first approach. In practice that means adopting an Interconnection Oriented Architecture (IOA) that shifts IT infrastructure away from centralized corporate data centers to the digital edge. With IOA, digital content, like payment processes and transaction information, is moved closer to the edge of the network.
IOA puts IT as close to the consumer as possible, creating the conditions for an exceptional customer experience. That means data is available where it is needed the most, almost instantaneously.
New digital money solves age-old problems
With increased interconnection making digital wallet processes simpler, smoother and even more secure, there is every reason to expect that e-wallets will soon replace the leather variety entirely.
With additional services and conveniences, and fewer security concerns, the argument against adding a digital wallet to any smartphone’s capabilities soon won’t seem like much of an argument at all.
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