DIGITAL WALLET

A Presentation by Sohil Gupta

 What is Digital Wallet?

Need
Components
Technology
Payment Model
Inner details
Implementation
Challenges
How it is being used right now?
The Future of Digital Wallet

WHAT IS DIGITAL WALLET

A digital wallet allows a user to make an electronic payment
with a financial instrument (such as a credit card or digital
cash), and hides the low-level details of executing the payment
protocol that is used to make the payment.

It authenticates the consumer through the use of digital

certificates or other encryption methods, stores and transfers
value, and secure the payment process from the consumer to
the merchant.

It can store multiple monetary and identification implements.

Monetary implements include cash, debit and credit cards, and
stored value cards while identification includes national or state
identification cards and drivers licenses.

THE NEED
Thick, bulky, unmanageable physical wallet.
Finding particular items is time consuming.
Evocating a lost wallet is extremely hard.
Managing multiple monetary and identification
implements is not easy. Monetary implements
include cash, debit and credit cards, and stored
value cards while identification includes national
or state identification cards and drivers
licenses.

Reducing the chance of theft by having only one

item to manage.

COMPONENTS
A digital wallet has a software and information component.
The software provides security and encryption for the personal
information and for the actual transaction.

Normally, digital wallets are stored on the client side and are easily
self-maintained and fully compatible with most e-commerce Web sites.

A server-side digital wallet, also known as a thin wallet, is one that an

organization creates for and about you and maintains on its servers.
Server-side digital wallets are gaining popularity among major retailers
due to the security, efficiency, and added utility it provides to the enduser, which increases their enjoyment of their overall purchase.

The information component is basically a database of user-inputted

information. This information consists of your shipping address, billing
address, payment methods (including credit card numbers, expiry
dates, and security numbers), and other information.

TECHNOLOGY
Secure Communication Medium
New NFC (Near Field Communication) chips are already
appearing in smartphones which provide very close range,
low power, easy to setup up point-to-point communication.
NFC acts as the communication medium for exchanging
monetary and identification information, such as credit card
numbers and receipts, with other devices.

Fast Secure Authentication and Secure Tamper Proof

Storage
Secure programmable chips in cell phones will allow the cell
phone to securely store both digital cash and the phone
owners monetary and identification implements.
This assumes that the cell phone owner secures his digital
wallet with a good password. This chip will ensure that
thieves are unable to access the digital wallet embedded in
the stolen phone. Biometric scanners could also be integrated
into cell phones and used for quick and easy authentication.

PAYMENT MODELS
For point-of-sale transactions:o
o

A NFC-compatible reader pad can be

deployed in retail stores.
When payment is required, consumers place
their cell phone on/near the pad and all their
valid payment options appear on a display.
They can then select the payment method
they plan to use (cash, specific credit card,
etc.) for the transaction.
The pad transmits the transaction request to
the appropriate financial institutions using
existing banking protocols provided by NETS,
Visa, Amex, and MasterCard.
The consumer can provide any necessary
signatures using a digital signature pad
located next to the reader pad.
Once the transaction is verified and
completed, the receipt is automatically sent to
the cell phone and stored for future reference.

 For peer-to-peer cash exchange, use the phones NFC capability

together with an easy to use peer-to-peer cash application. Using the
application, the payer can enter how much cash he needs to send to
the other person. The payer then taps the cell phone of the payee
and the cash is transferred instantaneously using NFC. The recipient
is then informed of the exact amount transferred.

HOW TO SUPPORT CASH

TRANSFER
Place cash in the digital wallet either by :
a) Topping-up the cash on device at specific top-up
machines which are integrated with existing
automated teller machines
b) Online by logging into banks online portal and
transferring cash into phone.

Transferring that cash to a retailer or another

digital wallet by using NFC.

WALLET ARCHITECTURE
User Profile Manager

User
Interface

User
Interface
API

Builds on top of the

Presents
a consolidated
Manages
information
connection abstraction
Providesthe
the
wallet
interface
wallet
Instrument
aboutfor
clients
and
Manages all of the
to
support
the
concept
with
an
interface
to
Manager
to the of
client.
The
groups
clients
of the
financial instrument
of
a
session.
send
and
receive
Manages all of the
Wallet
Wallet
Controller
wallet
includinghides
their
options
contained in
Controller
Responsible
for
messages
between
Provides
a
graphical
protocols
that the
the complexity
of the
user names,
the wallet, for
encryption of data.
wallets
and peer
interface
to the
wallet
may use to Client
other
components
passwords,
ship-toof
and
example, it may be
commerce
components
services accomplish
offered by the
various API
the wallet,
and and
bill-to
addresses,
queried to determine
by
setting
up
a
Wallet
Controllers
operations, and
Instrument
provides
a high-level
potentially
other user
which
instrument
Instances
connection
with
a
interface
invokes
protocols to
interface
to the client.
profile information
as
classes and instances
remote Communication
carry out the
well
are available to
Manager.
interaction between
execute a given
the digital wallet and
payment or other
Protocol
Protocols
the
vendors and banks.
Manager
operation

Communication Manager

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SECURE ELECTRONIC TRANSACTION

(SET) PROTOCOL
Clearing House
Merchant
Secure Line
3. Merchant software
forwards encrypted
message
2. Merchant &
4 . Clearinghouse
consumer
verifies account &
computers verify
balance with issuing
each others
bank
identity SET
encrypts order &
6 .Monthly statement
payment
issued
with debit for
information
purchase
1. Consumer makes purchase selects SET
payment option

Merchant
Bank
5 . Issuing
bank credits
merchant
account

Consumers Credit
Card Issuing Bank

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WALLET INTERACTION MODEL

Open
Session
Instrument Class
Negotiation
Protocol
Negotiation
Protocol
Selection

Open Session
Instrument Class Negotiation
Protocol Negotiation
Protocol Selection

Instrument
Selection

Instrument Selection

Transaction
Execution

Transaction Execution

Close
Session

Close Session

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INSTRUMENT CLASS NEGOTIATION

User Wallet

User Profile Manager

Vendor Wallet
UI

Instrument
Manager

UI

Customer Profile
Manager
Instrument
Manager

Wallet
Controller

Protocol
Manager

Communication Manager

Vendor
Controller

Protocol
Manager

Communication Manager

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TRANSACTION EXECUTION
User Wallet

User Profile Manager

Vendor Wallet

UI

Instrument
Manager

UI

Customer Profile
Manager

Instrument
Manager
Wallet
Controller

Protocol
Manager

Communication Manager

Vendor
Controller

Protocol
Manager

Communication Manager

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TRANSACTION EXECUTION

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A DIGITAL WALLET MENU

The Cards module is used for storing personal
card information, such as payment card
(credit, debit, etc.), loyalty.

The card details consist of card info (name,

number, etc.), account info (billing address,
etc.) and shipping info (shipping address,
email, phone number, etc.).

From the wallet, the user can fetch the

required information (stored in the ECML:
Electronic Commerce Modeling Language)
format via the WAP browser and easily fill in
the requiredAn
fields.
existing Internet standard,
already commonly used in Internet
The Personalshopping,
notes function
notebook
aimingistoaproduce
where thecommon
user canmethods
store private
information.
for transferring
transaction information from the
From the Settings,
the user can switch the
client wallet to the server
wallet code request on and off and change the
application.
wallet code when necessary.

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IMPLEMENTATION
Reuse the back-end infrastructure that routes credit card and debit card
information between retailers and financial institutions. Also retain the existing
ATM networks and online banking solutions.

Provide retailers with a single NFC-enabled point-of-sale device that replaces the
current separate machines for credit cards and debit card purchases.

Extend the physical ATM machines to also provide cash top up/removal services
for digital wallets. In addition, consider methods to extend existing online
banking solutions to support the digital wallet.

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CHALLENGES
Mass Market Appeal
Ensuring a mass market appeal for the digital wallet is
important to leverage scale economies and the network
externality effect. One way to increase the mass market
appeal is to make the digital wallet usable for all day-to-day
transactions.

Stake Holder Dynamics

Satisfying the business and strategic goals of multiple stake
holders such as banks, retailers, regulatory bodies, is difficult.

Compelling user experience

A user-friendly wallet interface, easy to use and intuitive is
difficult to produce.

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WHAT IS IN YOUR WALLET

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PAYMENT METHOD

20

FINANCIAL MANAGEMENT

21

COUPONS / CHECK-IN
INCENTIVES

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COMPARISON SHOPPING

23

TICKETS / PASSES

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THIS IS YOUR WALLET

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FUTURE OF DIGITAL WALLET

Online shopping from mobile devices
Price comparison shopping
Bill
Payments
The electronic
wallet will be able to facilitate purchasing from mobile
and PDAs.shopping at any Internet
The electronic
wallet willphones
allow comparison
Loyalty
Redemption
access point. This will provide true price transparency and consumer
control.
Personal
Information
Access
The electronic
wallet allow
scheduling
payment intervals for
electronic bills and invoices and receiving bill reporting from any
The
Virtual
Personal
Organizer
Internet
access
electronic
walletpoint.
will
give consumers real time reporting of points
under loyalty schemes and their conversion entitlements.
accrued
Pre-emptive
Purchasing
The
electronic wallet
will become a single access personal financial
portal
includingwallet
medical,
insurance,
motorcalendar,
vehicle, mortgage,
The
electronic
will
store
the
users
contacts, tasks
superannuation
Device to Device
Person
to
Person
Payments
and investment reporting.
and lists on the network allowing this to be retrieved and updated
from
any device.
The electronic
wallet will be able to pre-empt purchasing based on
habits and actually remind the consumer to make purchases on a
regular basis.

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REFERENCES
Electronic Wallets: Past, Present and Future, by Brent Clark.
Thin is in, The future of Digital Wallets, by Christina N. White for
SapientNitro.

Digital Wallet Technology, by Riyazuddin Khan

SWAPEROO, A Simple Wallet Architecture for Payments,
Exchanges, Refunds, and Other Operations by Neil Daswani, Dan
Boneh, Hector Garcia-Molina, Steven Ketchpel, Andreas Paepcke
from Stanford University.

http://en.wikipedia.org/wiki/Digital_wallet
Digital Wallet: Requirements and Challenges by Rajesh Krishna
Balan, Narayan Ramasubbu, Giri Kumar Tayi from Singapore
Management University and SUNY at Albany.

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THANK YOU!!

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