Remember The Name

10% luck
20% skill
15% concentrated power of will
5% pleasure
50% pain
100% reason to remember the name

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"Remember The Name" - Fort Minor

You ready?! Let's go!
Yeah, for those of you that want to know what we're all about
It's like this y'all (c'mon!)

[Chorus:]
This is ten percent luck, twenty percent skill
Fifteen percent concentrated power of will
Five percent pleasure, fifty percent pain
And a hundred percent reason to remember the name!

Mike! - He doesn't need his name up in lights
He just wants to be heard whether it's the beat or the mic
He feels so unlike everybody else, alone
In spite of the fact that some people still think that they know him
But fuck em, he knows the code
It's not about the salary
It's all about reality and making some noise
Making the story - making sure his clique stays up
That means when he puts it down Tak's picking it up! Let's go!

Who the hell is he anyway?
He never really talks much
Never concerned with status but still leaving them star struck
Humbled through opportunities given despite the fact
That many misjudge him because he makes a living from writing raps
Put it together himself, now the picture connects
Never asking for someone's help, or to get some respect
He's only focused on what he wrote, his will is beyond reach
And now it all unfolds, the skill of an artist

This is twenty percent skill
Eighty percent fear
Be a hundred percent clear cause Ryu is ill
Who would've thought that he'd be the one to set the west in flames
And I heard him wreck it with The Crystal Method, "Name Of The Game"
Came back dropped Megadef, took em to church
I like bleach man, why you had the stupidest verse?
This dude is the truth, now everybody's giving him guest spots
His stock's through the roof I heard he's fuckin' with S. Dot!

[Chorus]

They call him Ryu, he's sick
And he's spitting fire
And mike got him out the dryer he's hot
Found him in Fort Minor with Tak
What a fuckin' nihilist porcupine
He's a prick, he's a cock
The type woman want to be with, and rappers hope he get shot
Eight years in the making, patiently waiting to blow
Now the record with Shinoda's taking over the globe
He's got a partner in crime, his shit is equally dope
You wont believe the kind of shit that comes out of this kid's throat

Tak! - He's not your everyday on the block
He knows how to work with what he's got
Making his way to the top
He often gets a comment on his name
People keep asking him was it given at birth
Or does it stand for an acronym?
No he's living proof, got him rocking the booth
He'll get you buzzing quicker than a shot of vodka with juice
Him and his crew are known around as one of the best
Dedicated to what they do and give a hundred percent

Forget Mike - Nobody really knows how or why he works so hard
It seems like he's never got time
Because he writes every note and he writes every line
And I've seen him at work when that light goes on in his mind
It's like a design is written in his head every time
Before he even touches a key or speaks in a rhyme
And those motherfuckers he runs with,
The kids that he signed?
Ridiculous, without even trying,
How did he do it?!

[Chorus - repeat 2x]

[Outro - Mike Shinoda:]
Yeah! Fort Minor
M. Shinoda - Styles of Beyond
Ryu! Takbir! Machine Shop!

Mobile banking.... literally

Dear Reader,

Way back in 2007 when I was in the middle of my MBA, I came across a B-School case contest by the magazine Smart Manager. The contest challenged managers to solve a very specific business/managerial problem. In this particular case, it was about outlining a business expansion plan of the retail banking firm of a large bank. While researching more about retail banking itself, one bank's (Royal Bank of Scotland) historical method of bringing banking to communities stood out (see the links below... you should be able to get more links by Googling 'Mobile branch banking').

The worlds first mobile bank

A handy service for rural communities

Although RBS probably had different reasons to provide such a service back then, it seemed like an ideal way to expand banking services to customers and communities as a whole, for the case in question. Back in 2007, I felt this would be a good method for business expansion. However, the contest judges didn't seem to think so.

Nevertheless, years later the service continues to grow in Scotland and has also gone high-tech...

High tech mobile branches bring banking services to more customers

Money on wheels: Banking gets seriously mobile

and they even publish a schedule of stops...

Mobile Branch Timetable

So, what could be some of the challenges that existing banks in India may face to launch mobile branch banking?

We've never done anything even remotely close to it...

Actually, you do. Most banks send cash strapped vans to ATMs around the city/town to stock the ATMs with cash. This is pretty much the same thing, just needs to go that extra mile.

We can't send branches to rural communities, what if the van is attacked and all the money is stolen?

Get the van insured, use bullet proof glass, keep the cash balance low, square off the cash balance when it gets high, plaster large blown up posters of your CEO's face on the sides of the van, and show videos of your CEO sashaying down a ramp in the fashion show or giving a भाषण on a news channel debate. Don't forget to put the video in an infinite loop and full volume for maximum affect... that will surely drive away the vandals.

None of my employees want to go on the roadshow...

Put them on a rotating shift with perhaps a once a fortnight roadshow duty. Make sure they also work at the nearest branch and are accompanied by a teller and an IT guy. One of them can also double up as an automobile mechanic and the other can double up as the van driver! Also, can the van be air-conditioned? and maybe have a small refrigerator to store food and even have a porta-porta-potty?

We can't afford iPads in vans... we don't even have them in our branch offices!

Sure... don't use iPads but make sure you have a good reliable network connection to sync up transactions and other data so that you don't lose any of it. Maybe having a Pico base station will do the trick.

We have invested heavily in true mobile banking, and are more-ons to a smartphone app, so why waste resources on mobile branches?

A smartphone app has its place... no doubt about that but not everyone has a smart phone. Also, to install an app, YOUR customer needs to first have Internet access, download a compatible app, and install it. Why not get your IT guy to install a compatible version of the mobile app in YOUR customers' phone when they actually visit the mobile branch. The IT guy could also trouble shoot any issues and help them understand how to use the mobile app even after the mobile branch has left their locality.

We don't have good road access to all rural areas and communities?

Humph...

I don't like the idea....
?

Easier said than done...

Absolutely. I guess that's why mobile branches have not found much traction in India. 

All said and done, at the end of the day a commoner may feel that you come in a fancy van, do the dance and just run away with their money! One can never say.

Regards,

Jyothin

Broaden your Broadcast Horizon

Dear Reader,

News of H.265 (or HEVC - High Efficiency Video Coding) have been flooding the multimedia market with numerous firms announcing solutions on both the encoding and decoding side. But the standard is yet to see wide spread adoption to the extent that new handheld devices are yet to ship with a HEVC decoder.

Why hasn't a technology like HEVC gone viral? Is the industry entrenched and invested in H.264 and MPEG-2 to such an extent that switching costs to HEVC are too high? who is most likely to benefit with a high quality of experience and a high compression ratio?

The abstract below attempts to provide a possible answer to the above question, with some fairly modest arguments and reasoning.

Feel free to comment in the comments section or drop me a note on your views.

Regards,

Jyothin

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Introduction

We first start by examining the flow of media in a digital network from the time it is created/contributed till when it is consumed. We speculate on the quality and compression requirements at each stage of a media flow i.e. in the contribution stage, distribution stage and consumption stage. 

A Media Flow: is defined as the path that a media stream takes from the creation stage to the consumption stage. Examples include; 1) a local file playback is contributed and consumed at the same local node, 2) A YouTube video is contributed from a storage server, distributed via the Internet, passes through a network of nodes, and consumed on a client device, 3) the same YouTube video was contributed by a consumer on, perhaps, a handheld device and uploaded via the Internet onto YouTube storage servers., etc.

A Node: is defined as any element that is either used in the creation, distribution or consumption of media while at the same time being agnostic of the media type and/or mode of transport.

For the purposes of this blog, please refer to the 'Other Definitions' section below for additional definitions.

Media Flows

Media can be created at numerous ends of a media flow. Nodes that were traditionally considered as media consumers have now, also turned into media creators. With the advent of numerous services provided by companies like YouTube, Hulu, Vimeo, Facebook, etc. to upload, store, stream and download content,  it has become more than easy for consumers to turn into creators. This shift in content creation has also seen a shift in consumption patterns of content that has traditionally been considered of type Broadcast.

Moreover, new market dynamics like OTT services are forcing service providers to monetize these services, which have traditionally been fuelled by advertising revenues.

Figure 4 illustrates an end to end media flow diagram as agnostic to where the content is created or consumed. Different flows have different quality, compression and storage requirements.

Offline media content, which traditionally accounted for a large portion of the media transport mode, is slowly being replaced with online transport modes. However, offline transport modes do not pose significant real-time encoding or transcoding challenges when compared to online modes of transport. They however do pose real-time decoding challenges.

Creator nodes are those nodes that either capture or create content or have access to pre-created content to send to a distribution node or consumer node. Media creators include nodes such as; (A) DSNG, studios; (B) handheld mobile devices (smartphones, tablets, etc.), video phones, PCs/laptops, and other such similar nodes within an Enterprise network. 

A distributor node typically helps in only the transport of media, with or without a change in the quality/compression ratio of the media itself. Media distributors include nodes such as DBS, Cable, DTT, streaming servers/gateways, network switches, network routers, local headends, set-top box, residential/home gateway, DSL CPE, Wi-Fi router/access point, base-stations, and DVR/DVD players, etc.

Figure 1: A comprehensive media flow diagram

A consumer node typically consumes media by either displaying/rendering it for viewing purposes or storing for later viewing. Media consumers include nodes such as; A: digital televisions, B: handheld mobile devices (smartphones, tablets, etc.), video phones, PCs/laptops, and other similar nodes within an Enterprise network.

Quality vs. Compression

A break down a media flow into different stages helps in examining video processing requirements at each stage by plotting a two dimensional chart; video quality requirements on one axis, and compression requirements on the other axis. The table below describes the nomenclature used in this blog.

Finally with this categorization we see which elements in a media flow are best suited for the adoption of HEVC 'first' which will then lead to adoption of HEVC in other stages, with an overall compelling advantage for using HEVC.

Figure 2: Quality vs. Compression trade off for various nodes in a media flow.

• Creators (A): Typically would need to capture content at the highest quality to have minimum loss of information and detail. However, the captured content needs to be transported to a studio or post production center as efficiently as possible. For example, a live sporting event that is captured using high end cameras is transported via satellite to the studio for post processing and distribution. Hence I've positioned creators of type A with the need for high quality and high compression.
• Creators (B): Content captured via handheld devices for upload to video servers will need high compression ratios in order to shorten the upload time as well as lower costs for the consumer. Hence  a need for higher degrees of compression is felt here while at the same time not sacrificing quality greatly.
• Distributors: Being agnostic to the content format, such nodes will need to optimize bandwidth usage and hence need high compression ratios to pack more channels in the same available bandwidth.
• Consumers: For the best quality of experience will need high quality content for playback and viewing. However, cost sensitive consumers will also need to keep an eye on their bandwidth usage to keep costs under control and hence the need for optimal compression.
• Mass Storage: If the marginal cost of adding an extra Gigabyte of storage is higher than the marginal increase in content that needs to be stored then the need would be for higher compression. If on the other hand the marginal cost of adding an extra Gigabyte of storage is lower than the marginal increase in content then compression ratios can be sacrificed for storing high quality content.
• Offline Distribution: Offline storage media being cheap it would make sense to storage high quality content for later viewing by consumers that anyway expect a high quality of experience from offline storage medium.

Conclusion

Maybe HEVC just needs that one viral video for it to go viral !!

Other Definitions

• Media refers to audio, video and graphics but in this blog the primary emphasis is on video.
• Media can be contributed/created at the any end of a media flow.
• Media can be distributed via numerous transmission modes but here we primarily focus on digital mediums and digital modes of transmission.
• Media can be consumed at any end of a media flow.
• An "Enterprise Network" is any closed network that can distinctly be isolated from the Internet.
• A "Short form" video is user-generated video and other video clips generally less than 7 minutes in length.
• A "Long form" video is content generally greater than 7 minutes in length.
• Video calling is video messages/calling delivered on fixed Internet initiated by smartphones, non-smartphones, and tablets.
• Internet video to TV is video delivered through the Internet to a TV screen, by way of an Internet-enabled set-top box (for example, Roku) or equivalent device (for example, Microsoft Xbox 360), Internet-enabled TV, or PC-to-TV connection.
• Live Internet TV is peer-to-peer TV (excluding P2P video downloads) and live television streaming over the Internet.
• Internet PVR is recording live TV content for later viewing.
• Ambient video are nannycams, petcams, home security cams, and other persistent video streams.
• Mobile video is all video that travels over a 2G, 3G, or 4G network.

References

According to Frost & Sullivan, the market for video transcoding will grow to $630 million by 2017, up from $264 million in fiscal year 2012.

Models, models and more models...

"You! Yes, you! Stand still laddy!
.......
.......
.......
"If you don't have a model, you can't make an estimate. How can you make an estimate if you don't have a model?"

- The Wall

PS: Models don't always work (except if it is a model in the fashion industry!) and some would also say that all forecasts are wrong

PS: Here is a link to my Masters thesis - "Packet Data Network Traffic Modeling"

The small difference between WPI and CPI

Dear Reader,

Welcome back.

Inflation is a big topic in India. With prices rising uncontrollably, everyone is concerned about the increasing prices and everyone has an opinion on how to control inflation. One look at the WPI (Wholesale Price Index), in Fig 1 below, shows this alarming trend.

Fig 1: WPI Month over Month

(Chart is dynamic and will be updated with the latest data as and when it is available)

No surprises there. WPI is showing an increasing trend as has been widely reported in the news. Here is the link to the reported WPI data. Note that the x-axis in Fig 1 is the month in which the data is reported.

Fig 2: CPI Month over Month

(Chart is dynamic and will be updated with the latest data as and when it is available)

Again, no surprises here either... CPI is showing a steadily increasing trend similar to that of the WPI. Here is the link to the reported CPI data (Base Year 2001). Note that the x-axis in Fig 2 is the month in which the data is reported.

Fig 3: % Change in WPI and CPI Indices (Chart is dynamic and will be updated with the latest data as and when it is available)

Compare Fig 3 to the % change in CPI in countries which have a GDP in the same range (~2 USD Trillion) (in the year 2012).

Table 1: Countries listed in order of GDP (Data in table is static)

Fig 4: % Change in CPI Canada & CPI Italy
(Chart is static)

And to the CPI in US when the US GDP was in the range of 2 USD Trillion.

Table 2: US Historical GDP
(Data in table is static)

Fig 5: % Change in CPI US (in 1976)

(Chart is static)

Visual Analysis

From Fig 4 and Fig 5, changes in CPI (month over month) in Canada and US (in the year 1976) were, on average, less than 1.00% and more or less constant, which is how one would expect variations in prices to be in a stable economy.

From Fig 3, one can also infer that an increase in WPI is causing an increase in CPI. There however must be a lag in how quickly changes in CPI react to changes in WPI, assuming there are no other external factors. One could argue that the change is 'immediate' but how 'immediate' is this affect? From the chart this lag appears to be anywhere between 1 month to 3 months.

Examining Fig 1 and Fig 2, it almost seems as if the two indices are competing neck to neck independently with an underlying trend common to both indices. We know this can't be true as consumer prices implicitly depend on wholesale prices. If this is not true, there must be something wrong.

Individual indices are reported some where in the 2nd week of the month for the previous month. So, it is safe to assume there is no reporting lag between WPI and CPI. A lag, if any, must simply be the time it takes for retailers to adjust prices for changes in wholesale prices.

For example, A reported change in wholesale prices of potatoes on 15th February for the month of January should show up in a reported change in the consumer price of potatoes on 15th March for the month of February, assuming there is a lag of 1 month for the price change to reflect. How much is this lag in reality?

Visually inspecting Fig 3 can put this lag to anywhere between 1 month to 3 months.

Analytics Based Analysis

Basic Stats

mean - mean of CPI index (unless otherwise stated)

stddev - standard deviation of the % change in the CPI index (unless otherwise stated)

time periods for rows 1-3 are as in their corresponding figures

time periods for rows 4-5 are as in their corresponding figures going back 1 year from the latest month.

Table 3: Basic statistics

(India (WPI) and India (CPI) rows are dynamic and will be updated as when new data is available)

Table 3 shows the standard deviation of the % Change in Index, and as can be seen both the WPI and CPI in India have a high standard deviation. Which means the degree of fluctuations in WPI and CPI are high as compared to the standard deviation in row 1 or row 3.

A steadily increasing (or better still decreasing) price trend or a constant rate of change of a price is always a good sign. Such a trend in price also means that there are, a) no random factors affecting price changes, b) it is easier for end customers to adjust to price changes, and c) it is easier to be prepared for a price change in the following months.

Auto-Correlation

Just for kicks lets see what the Auto-Correlation plots for WPI and CPI look like.

Fig 6: WPI Auto-Correlation Plot (1 unit lag = 1 month)
(Chart is dynamic and is updated as and when new data is available)

Fig 7: CPI Auto-Correlation Plot (1 unit lag = 1 month)
(Chart is dynamic and is updated as and when new data is available)

Both WPI and CPI show a high degree of correlation with itself for various lags. There is also a cyclical trend here with a cycle of 12 months. A cyclical trend in WPI and CPI is interesting because one wouldn't expect prices for a basket of goods to correlate with itself 12 months ago UNLESS the basket of goods only consists of goods that are dependent on something that is dependent on an annual cycle. A cyclical 12 month trend could be attributed to goods like food grains and other agriculture related commodities that are highly dependent on the monsoon season but certainly not to fossil fuels, textiles, wood, paper, etc. Moreover food grains and agriculture related commodities have a weight of ~14% in the overall calculation of WPI so we can't say that their contribution to WPI is comparatively significant.

Cross-Correlation
The cross correlation plot shows the lag at which the correlation between CPI and WPI is highest.

Fig 8: CPI (at lag 0) vs. WPI (at different lags) Cross-Correlation Plot (1 unit lag = 1 month)
(Chart is dynamic and is updated as and when new data is available)

Turns out (at the time of writing this blog) CPI has the highest correlation with 0-1 month lag WPI. In other words, a price change in WPI in early months reflects in a 'similar' price change in CPI in the following month.

Conclusion

A strong cross correlation between CPI and WPI in early months with very low correlation in later months is interesting because this means price changes are reflected in CPI as quickly as they happen in WPI. Also, one would certainly not expect cyclical trends in the cross correlation. However, this confirms our inference on visually inspecting Fig 3. that the lag is between 0 month and 3 months. One would have expected this lag to be higher! it probably takes more than 3 months to just move finished wholesale goods to a consumer production site let alone have the finished good ready for consumption.

The Auto-Correlation plots for CPI shows strong correlation at lower lags, in other words it has a 'short tail' (ignoring the cyclical trend). A short tail is fine if the demand is constant or demand does not change with price - otherwise, retailers would have to make significant adjustments in their inventories on a month to month basis resulting in either wasted inventory or lack of it, but we don't hear much about inventory adjustments by retailers - perhaps it is absorbed in the cost of doing business? For a country like India where the population numbers are significant, it is sort of 'safe', to assume that there is always a demand for the basic basket of goods used in calculating WPI/CPI.

Additionally, when modeling CPI as a series of data, we can use Auto-Regressed CPI data, the 0-3 month lag WPI data as the base and additional random variables that are independent to the WPI data. For example,

cpi[i] =                              C[i-1] * cpi[i-1]  + C[i-2] * cpi[i-2] + ....
             W[i]   * wpi[i]    + W[i-1] * wpi[i-1] + W[i-2] * wpi[i-2] +  ...
             CB[i] * consumer_behavior[i] +
             OEFIA[i] * other_external_factors_if_any[i] + 
             R[i]

Where R[i] is a random sample of a random variable. If consumer_behavior and other_external_factors_if_any are modeled accurately, R is a Normally distributed random variable.

Or maybe adding mobile/cell phone devices as a separate line item in the list of items when calculating WPI may change the model.

A Note on Trends in Prices

Changes in a price of a commodity can be due to numerous factors. A simplistic argument to an increasing trend in price can be attributed to a) an increase in overall demand, b) its "perceived" value increases or willingness to pay is high, c) an increase in its intrinsic value, d) it is just priced high or is selling at an inflated price. Similarly, a decreasing trend in price can be attributed to a) an overall decrease in demand, b) its "perceived" value decreases or willingness to pay is low, c) a decrease in its intrinsic value, or d) it is just priced low.

Some Assumptions

• The data reported for calculating the indices are accurate
• Ignore all external factors that might affect an index
• Changes in WPI almost always affect a change in CPI

References

• Wikipedia entry for WPI
• Wikipedia entry for CPI
• India Office of the Economic Advisor
• Commodities and their weightages in WPI calculation of India, Part I
• Commodities and their weightages in WPI calculation of India, Part II
• Commodities and their weightages in WPI calculation of India, Part III
• INDIA CONSUMER PRICE INDEX (CPI)
• Historic inflation India - CPI inflation
• India Labour Bureau
• United Nations Statistics Division - National Accounts,   GDP and its breakdown at current prices in US Dollars (All countries for all years - sorted alphabetically)
• US Gross Domestic Product GDP History
• Inflation and CPI Consumer Price Index 1970-1979
• Canada - Consumer Price Index, 2000 to Present
• Recent Consumer Price Index for Italy
• Italy - Economic and Financial Data

Feel free to leave a comment in the comments section or if you find anything amiss in the above analysis.

Where's my m-Wallet?

Dear Reader,

I recently attended a conference on mobile apps, mobile technology and mobile commerce. Although the conference had some interesting talks, panels and exhibitors - I'll leave details of the day's events for later. But an interesting incident occurred that day that left me thinking and exploring the mobile commerce market.

I walked into the conference gate and realized that I had left my wallet at home. Too lazy to go back home and pick it up - I resolved myself to get through the day without a penny in my pocket. Essentially starve myself through most of the day. Fortunately, I had a few dry fruit nuts in my bag to help me curb my hunger pangs.

The conference had a snack bar serving beverages and snacks throughout the day. The stall was nothing fancy and I guessed the vendor sourced his snacks and beverages in the morning and stocked himself with a rough estimate of how much he thought he could sell. All the items on the list had a markup of 20% and payment was in cash only. So, the vendor probably paid up for supplies or made a deposit and towards the end of the day he'll have to clear his balance and pocket the profits. Transactions start at the end of the day and close at the end of the day with all dues cleared by the end of the day.

I wondered, if I had a m-Wallet could I use it to pay this vendor, would the vendor be willing to accept such a mode of payment? What would he look for in adopting a m-Wallet mode of payment? What technology would help make it easy to adopt such a mode of payment?

I went home at the end of the day, picked up my wallet, ordered some chinese take away food and settled down to do a bit of research on m-Wallets.

Below you will find a summary of my findings and thoughts. Do let me know what you think in the comments section.

Until next time.

Regards,

Jyothin

---

Introduction

'm-Wallet' is a term used to describe modes of payment that use mobile devices to transact via wireless communication. 'm-Commerce' is an umbrella term for all such mobile transactions and includes m-Wallet as one such method.

For the sake of simplicity, I define m-Wallet as "A method to store cash and a mode of payment as a replacement to cash". Cash based payment IS the conventional method - the WYSIWYG payment method. It is fast, it is in your hand, ready to use, easy to use, and of course the more the merrier ;-). m-Wallet, as per the definition above, is an alternative to the cash in your traditional wallet.

I've taken the approach of m-Wallet as a replacement to cash and not as a replacement to debit/credit cards. The reason being - in most developing countries, a) cash is still king where the majority of the work force earn a daily wage and live hand to mouth, b) a majority of them don't have an active bank account (current or savings), c) a majority of them feel more comfortable managing their own money and knowing where it is going.

Payment Methods

The list below summarizes the most common payment methods that are in use and their typical usage methods in third world countries.

• Cash: conventional and most widely used, cash in - cash out, fast, handy, easy to use, less secure, feels more secure, typically low value transactions.
• Smart card: not much in use nowadays, 'cash is in the card', 2-step process (needs a secure PIN to complete the transaction), needs a smart card reader, cash in - cash out, more secure, typically low value transactions.
• Debit card: widely used, 2-step process (needs a secure PIN to complete the transaction), needs a debit card reader, the bank is the middleman, debit and credit into bank accounts take more time than smart cards, secure, typically low to mid value transactions.
• Credit card: widely used, don't need to have cash in the account to transact, needs a credit card reader, the bank is the middleman, debit and credit into band accounts take more time than smart cards, secure, typically mid to high value transactions.

Other modes of payments include cheques (or checks), DD, online (Internet based account to account transfers), etc.

For a simple transaction of buying a cup of coffee, we either pay by cash, smart card, debit card or credit card. The rest either take too much time or are too cumbersome when all you want to do is buy a cup of coffee.

Facts and Figures

The chart below shows the volume of transactions in cash, m-Wallet (projected), debit cards and credit cards. Cheque based, ECS, and other electronic based retail transactions are excluded.

The chart below shows the penetration of PCs, TVs and Mobile phones in India as their projections until 2015. Clearly, mobile phones have had the highest penetration rate.

m-Wallet Transactions

The figure below illustrates a simple cash based transaction (buying a cup of coffee) between a vendee and a vendor.

The vendee withdraws cash from an ATM and stores it in a physical wallet. Cash in the wallet is used to pay for goods (or services) to the vendor in exchange for goods (or services). The vendor pays cash to cover costs and deposits the profits at the bank. There are no transaction costs.

Figure 1: A simplistic cash based transaction.

Now let see the role of a m-Wallet in the same transaction (see Figure 2 below). A vendee loads his/her m-Wallet with cash by initiating a transfer transaction to the bank. Such a transfer transaction could be via SMS with additional security like a unique PIN/authentication/OTP. Once loaded, cash in his/her m-Wallet can be considered as being equivalent to hard cash with the exception that you cannot feel it. At the bank's end, a load transaction is only an account to account transfer for the same user. The m-Wallet itself is in a NFC enabled mobile device. The vendee then uses NFC to sync with the vendors' NFC enabled mobile device to initiate a payment transaction. The vendee transfers cash to the vendor's m-Wallet and goods are exchanged to complete the transaction. The vendor may or may not choose to unload the cash in his m-Wallet but if the vendor does choose to unload the steps would be similar to loading and again for the bank it would only be an account to account transfer for the same user. Again, there are no transaction costs. Transaction 1 is like going to an ATM and with-drawing cash. Transaction 4 is like going to a bank and making a deposit.

The vendor can then use the same cash in his/her m-Wallet to pay for costs or transfer it back into his/her bank account via a secure PIN/authentication mechanism.

Figure 2: A simplistic m-Wallet based transaction.

Note the additional notification steps in Figure 2. When a vendee initiates a m-Wallet transaction at his/her end a notification is sent to the bank with details of the payment being made. Similarly, when a vendor completes a m-Wallet transaction at his/her end a similar notification is sent to the bank with the details of the payment received.

(Psst... the vendor and vendee don't really need to know that the notification is being sent... it can be an automatic process)

What I've tried to do here is replace your wallet with an m-Wallet in your mobile device. There are no transaction costs and neither the vendee pays less than when using cash (or m-Wallet) nor does the vendor charge more than when accepting cash (or m-Wallet). Of course, for the vendor to cover his costs his/her suppliers should also have a m-Wallet. Just makes it that much more easier for the vendor.

This leads us to the question of 'Why would anyone want to use a m-Wallet as opposed to cash in the wallet?'

Clearly, there is a certain market segment - the ones that have forgotten their wallets at home like me - who would benefit from being able to pay using their m-Wallets and some others who may like the convenience of using a m-Wallet. My presumption is that this would be a very very small % of the market size and that too such situations are incidental. This certainly does not warrant a vendor to adopt a m-Wallet based payment system, they would rather stick to hard cash based transactions than worry about PINs and customer convenience just for one day. Their goal for the day would probably be to sell as much as possible. 

And without vendors accepting m-Wallet based transactions, money in a vendee's m-Wallet is practically useless to transact.

An off chance technology savvy vendor could accept m-Wallet based transactions and perhaps price his/her goods differently for cash based and m-Wallet based transactions but then again its too much work for any vendor looking to run a day-to-day business and who hopes to make a quick buck at the end of the day.

Taking a step back, I've tried to answer the question - 'What's in it for me?' from the point of view of each of the below players,

• Some random government official - "Ideally we would want to be able to track every financial transaction that takes place in an economy. 'Track' here refers to the ability to monitor any wrong financial doings/illegal transactions, etc. All transactions via a bank or bank account or electronic media are in some ways accounted for. What is left are those cash transactions that exchange hands with no way of knowing the parties involved and hence no way of knowing if it is a legal transaction and in turn affect tax collections. We certainly see m-Wallet as a means to having some accountability. m-Wallets would be most beneficial to those who have low incomes, are daily wage earners.. blah blah blah .. yawn .. blah blah blah ..foot in mouth... ahem sorry.. that live hand to mouth. We are even willing to encourage banks to initiate a new type of bank account, called a m-Wallet account. Money in this account is what is in your m-Wallet and can be used freely for m-Wallet transactions. Of course, we are assuming here that everyone will own a NFC enabled device. Is that a fair assumption?"
• Some random bank official - "An m-Wallet current account sounds interesting but we already find it difficult to get this target market (namely low income daily wage earners that live hand to mouth) to open and use a normal current account. It would be even harder to get them to understand and use a brand new m-Wallet account. It will sound like just another fancy term. Unless we provide an incentive to open a m-Wallet account, say, in the form of a better rate of interest on these accounts, not many would see a benefit in opening one. Perhaps, if we can provide an interest rate of (say) 10 basis points above the existing interest rate on a current/savings bank account, new customers would be willing to open new m-Wallet accounts and existing customer would be willing to move their money from existing accounts to a m-Wallet account. Money in the m-Wallet account would get the benefit of this high rate and all loading/unloading to a customer's m-Wallet will be to this account. A m-Wallet bank account also limits ones cash exposure to only a fraction of their savings account thus making one's savings account a little more protected from fraud/theft (conceptually of course). For us as a bank, if total new deposits in m-Wallet accounts is not going to be significant it is not worth even providing a +10 bps interest rate on these accounts. Besides, we will still have to do inter bank transfers to settle all m-Wallet transactions periodically."
• Some random banking software developer - "Damn... more work! When will I ever get to work on something new and cool than maintaining some useless banking software. I can either spend the rest of my life making this software real real fast so that it can do millions... no billions of quick short m-Wallet load/unload transactions and notifications with all the mumbo jumbo security that goes with it OR I could spend the rest of my life making Inter bank m-Wallet account settlements fast and easy. But for now... its time for a coffee break. Oops, I have no cash in my wallet... time to look for a new job."
• Some random mobile handset manufacturer - "NFC is a fairly new technology that is seeing traction in sharing contacts, photos, musics, and other data. For NFC based money transfers, enhanced security features will be needed. The technology needed to make secure NFC transactions would be an extension of the security we already provide for mobile payment/m-commerce transactions through a 3G/4G wireless connection. But making secure transactions as fast as the time it takes to pull out a few wades of cash from your wallet, may be a challenge. Also, not all mobile devices are NFC enabled. We could use alternatives to NFC, like QR codes, or some other kind of handshake mechanism between the vendee and vendor but it has to be handshake mechanism. These are small value transactions so the faster and easier it is, more people would be willing to use it."
• Some random vendee - "If I get a higher interest rate on an m-Wallet account, I would be interested in using it more. A m-Wallet is certainly more convenient when I run out of cash and need to make an urgent purchase. Again, it is useless to me if a vendor does not accept m-Wallet transactions and if the banks charge me a setup fee or transaction fee... sorry no thanks! Is m-Wallet secure? Is it possible for someone to steal cash from my m-Wallet without my knowledge? how can we prevent such thefts? What if I lose my mobile device?"
• Some random vendor - "If I get a higher interest rate on my m-Wallet account, I would be interested in opening, using and accepting m-Wallet transactions. But I will also have to pay my suppliers at the end of the day. It would be nice if they too accept m-Wallet transactions. Otherwise I'll have to pay them hard cash which will not be quick especially because my incoming cash is stuck in my m-Wallet. I also don't want to keep my customers waiting in line for a NFC transaction to complete. It must be fast and secure. Otherwise customers will just give me hard cash and walk out, which is fine for me. On the other hand, if a m-Wallet customer ends up purchasing 2.5x times a hard cash paying customer, I don't mind keeping them waiting."
• A random hundred $ Bill/Rs. Note - "I prefer sitting in a bank vault in the comfort of my fellow notes than sweat it out in the open, going from one hand to another. Some of these hands give me all kinds of tattoos! The most popular being "I luv u" (and sometimes their cell phone number). I can understand if they really love me so much... who doesn't? I'm money after all, but they don't need to make it explicit by giving me a tattoo. Some of these hands are dirty. I certainly don't want to be called dirty cash and labelled illegal. I am fine with my virtual m-Wallet buddy spending time on someone's mobile device as opposed to me sitting on someone arse."

Aha... but P2P transactions are not allowed by RBI !

Honestly, I'm not sure why but anyways. 

Although the above seems to be a P2P transaction, it is not. 

In affect, the P2P method described above only mimics an account to account transfer. The key here being the notifications that are mandatory and sent to the bank to notify the bank that a payment has been made/accepted and also to keep track of the balance in the m-Wallet account.

If you don't like P2P, just call it something else.

Not another middle-man

Paytm, freecharge.in, etc. are examples of some middlemen companies that provide mobile services that make it convenient for one to recharge their prepaid mobile, pay bills, and execute other similar transactions from their mobile device. The best way to take advantage of their service is to download their mobile app (which is free) and make payments using the app. Some of their services are free and some are not. Such middlemen could also play the role of a m-Wallet service provider by engaging with various banks to make the process seamless both to the banks and the vendee/vendor. Then again, if they charge for such a service, would a vendee/vendor be willing to pay? An added overhead of a mobile app is that for effective use of the app, subscription to a data plan is a must which would again be an underlying cost to a vendee/vendor.

Figure 3: What value can a middleman add to the ecosystem?

Conclusion

The wave is already there. One only needs to build the right surf board and get someone to ride the wave without falling off.

Whatever the outcome... I still want to be able to buy a cup of coffee the next time I forget my wallet and I know for sure that the likely hood of me forgetting both my wallet and my mobile is very remote.

Or maybe I'll just use a bit-of-coins!

References

• Wikipedia entry for Mobile Payment
• Vodafone, ICICI Bank India launch M-Pesa mobile wallet
• Wallet Wars
• mobilefinancial: m-Wallet
• Money-on-Mobile M-wallet service launches for Indian consumer market
• Wikipedia entry for Mobile Commerce
• If you are finicky about debit/credit cards, refer to the below articles by Finacle
• Why card is king: the need for improving card acceptance in India
• Card-based virtual wallet transactions at no cost!
• Kill cash: Advantages of Cashless transactions
• Shaping the future of India's cards and payments landscape
• RuPay, RuPay goes online
• Mobile money transfer fee cut to 10p
• National Payments Corporation of India