Virtual David takes on polyvinyl chloride Goliath in e-wallet
Xromb is a private Toronto company is planning to reach into your wallet and snip all your plastic cards, coupons, and loyalty cards — after you’ve uploaded them on your Smartphone using their game-changing software FastTouch.
In prehistoric times when fax machines were the sexiest pieces of equipment on the planet no one would have predicted that a Smartphone would be used to convey electronic information between users.Yet it came and just as Barak Obama became addicted to his Blackberry, teenagers began using their Smartphones for social media and entertainment. Those pesky teenagers pushed the world into a new era that led to the demise of Research in Motion. It is possible, so Xromb speculates, that the same generation will take us to another cybernetic frontier: the e-wallet era.
The company has developed patent-protected software permitting the deployment of 50 Smartphone e-wallet functionalities: manage your credit balances in real time to know if you’ve overspent on your budget, take advantage of coupons, and help your local retailers all at once.
Mobile applications are so fundamentally different from desktop applications that the learning curve is as treacherous as the north face of Mount Everest. Because there is a constant risk of interruption between the network and Smartphones the basic software managing data transfer must ensure ultrafast data transfer and even anticipate the type of data that the user will need next. Of course there was a plurality of security issues that Xromb has resolved.
A game changer for sure. Right?
According to Xromb’s CEO Valdis Martinsons: “This is a David and Goliath struggle.” By all standards, as a former Chief Information Officer for Research in Motion (2000-2004) who was part of the past team that put the Blackberry at Barak Obama’s texting fingertips, is more than competent to address the technological uncertainties to make e-wallet safe and efficient.
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The problem is that the e-wallet has too much disruptive power for the current e-commerce industry: it offers the functionalities to create new currencies and the ability to bypass credit cards. It awakens a giant polyvinyl chloride (PVC) toll collector, a likeness of Goliath, fiercely guarding the entrance to the e-wallet bridge.
Imagine for a moment that you have invented a new fuel that you produce for half the cost from something the size of a washing machine: a game changer to fade out oil. Would the oil interests embrace you with open arms? Not in a million years. Why would they let you take over their business? They have invested trillions in the oil value chain and they don’t want to see you chip at their revenues.
Credit cards companies are to the e-wallet what Big Oil is to our fictitious disruptive technologies. They strong-arm retailers through credit transactions that are hidden from consumers. Whenever customers enjoy the polyvinylchloride convenience of a credit card, the merchant is forced to give away 1.7 to 3 percent of their transaction costs. Premium credit cards have even higher fees. Merchants have absolutely no choice in the matter and according to recent court rulings, cannot pass those fees to consumers directly.
Credit card companies aren’t about the e-wallet, they are about making money and they will not give away their revenues without a fight. For example, most credit cards are made with polyvinyl chloride (PVC), which is a petroleum-based plastic, currently non-recyclable. Polylactic acid (PLA) cards are biodegrade in 82 days. They are made from cornstarch. But credit card companies will not use PLA cards because they are twenty percent more expensive. So the cards would cost them 5 cents. If credit cards companies won’t spring a 5-cent increase in the cost of material do you think they will give away their transaction margins?
Where is the slingshot that will slay Goliath?
Communities or interest groups might be the key solution to adoption of the e-wallet: all it takes is a group of people to agree to transact the same way. Let’s say the “Save-The-Local-Business-Society” decides that it wants to support community businesses. It has the option to generate its own “Community points” that have actual cash value and transact using Xromb’s software, thus bypassing the usual e-commerce process.
Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>