Scaling up, but staying safe

The issue of trust is not only a motivating force for innovation; it is the fundamental challenge of integrating digital transactions. People need to believe their money is safe, which inherently slows the adoption of digital wallets and other transaction platforms. The good news is that progress on security is happening already. One popular application, for example, doesn’t store card numbers directly on the phone. Instead, the app sends the merchant a token linked to credit information, so if the company is hacked the consumer’s information remains secure. The growth in biometrics also is booming. Many phones, for example, offer fingerprint technology for secure access, and companies in Japan have developed a method to identify people by their veins at ATMs. (Global ATM fraud and theft is estimated at around $1 billion annually.) Today, tens of thousands of ATMs in Japan are essentially theft-proof.

Demirors talks about breaches that have compromised financial data

Another challenge is to move beyond peer-to-peer and into purchasing. In the United States, for example, as of 2015 there were only about 220,000 merchant point-of- sale terminals equipped with NFCs, the wireless technology required to process mobile payment platforms. Put another way, you couldn’t use a digital wallet at most retail stores even if you wanted to. Working in West Africa, entrepreneur William Senyo, chief executive officer of Impact Hub Accra, sees a similar problem: “The biggest leap that needs to happen now is in moving from peer-to-peer transfers into every transaction, like buying my gas and going to the grocery store, where it’s the predominant way of doing business.”

Once these issues are overcome, however, digital finance innovation offers widespread benefits. Theft of paper money, for example, which is a big issue for businesses, could be a thing of the past. And transaction services offer new money-making opportunities for industry players. According to Boston Consulting Group, digital payment revenue could grow to more than $2 trillion a year by 2023.