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Change for a Billion

Rohit Bhat

We are witnessing a new Renaissance today – one in which hackers and designers are the new painters, shaping the world around us through code.

While the leaps in arts and science during the Renaissance are well known, the leaps in the economy are often ignored. The period saw improved trade and commerce owing largely to relative political stability and a confluence of innovations in payments and banking. These included (a) the creation of the printing press, reducing the cost of record keeping (b) the invention of double entry book-keeping, reducing fraud and error and, simply enough, (c) better roads, leading to faster information exchange. In many ways, the troika above reduced the costs of computing, networking and storage for the banking system.

Consequently, the period saw the rise of many banks, including the Medici Bank and Banca Monte dei Paschi di Siena, the oldest surviving bank in the world. In turn, this resulted in higher trade through more sophisticated bank guarantees, forex contracts and improved insurance underwriting.

In today’s Renaissance, we are witnessing a similar convergence in technology gains, resulting in a new payments ecosystem. At the heart of this ecosystem is the ubiquitous mobile phone, doubling up as authentic record keeper and gateway to the payments network. Fast growing internet connectivity is providing a digital alternative to physical roads for the dissemination of information. The IMPS framework is reducing the cost of trust and fraud by providing instant reconciliation, something bank guarantees or batch processing could never do.

Most companies today are capturing simple use cases - split payments at a restaurant, expense reconciliations with friends, frequent payments to a taxi aggregator, ecommerce purchases. However, this is only the beginning.

Imagine a village, a town, or a city, using only the mobile platform for payments, effectively eliminating the need for cash in the process. Imagine banks or payment banks encouraging greater savings by offering low cost accounts. Imagine the benefits to measuring every single transaction and having access to the financial profiles of all the participants in an economy. Imagine lending (especially to the marginal sections) moving from being asset backed to being cash-flow based. Imagine the government providing swift and effective schemes directly to the right segment. Imagine the tax system getting revamped in this new ecosystem.

To make the dream above a reality, Sequoia recently partnered with Chillrhttps://chillr.in/ to make payments from your bank account to that of a friend or a business as simple as Whatsapp messaging.

Changing the way cash is used could impact over a billion. No longer will you hear – do you have any change?