Andy Khawaja, CEO, Allied Wallet: "Technology and regulation are equally responsible for innovation in e-commerce and mobile commerce"

Andy Khawaja is the CEO of Allied Wallet, a multi-billion dollar company which continues to revolutionize the e-commerce industry by introducing new and innovative payment processing solutions for online merchants, enabling them to send and receive international payments. With PCI compliant merchant services for nearly any business size, Allied Wallet provides a state-of-the-art payment gateway to optimize online transactions for any company. Allied Wallet continually develops software to integrate with every e-commerce solution in the

Your company has been recently featured in Fortune Magazine’s section “The Digital Dollar” as a pioneer of payment innovation in 2013. Could you please elaborate on the degree of innovation you deliver?
Andy Khawaja: Allied Wallet is currently improving online processing and mobile payments in terms of a few things. Internet is global, transactions are global and that means that people transact in different currencies from all around the world. What’s been happening in the past is that mobile payments have been focused only on local currencies. For example let’s say you are based outside of the US and your mobile payment only allows you to transact in GBP. Let’s say you are based out of the US and your mobile payment only allows you to transact in USD, etc. Allied Wallet has implemented a system that will allow you to transact in any giving currency; so, wherever you are and whatever currency you are processing into, the mobile application will be able to handle that.

That was number one. Number two is the security of the mobile payment which is very important. A lot of mobile apps are not PCI Level 1-compliant. Allied Wallet is one of the few mobile application that has PCI level 1 compliance which means that all the credit card transactions that go through our software are completely encrypted and can never be hacked or stolen, something that is very important especially when you talk about mobile payments. When you are sitting somewhere in public and you are entering your data, you really don’t want to do that in public because you never know who is watching over your shoulder. What Allied Wallet has done is that we implemented the virtual wallet and linked it to the mobile payment, which means you can store your data meaning you never have to pull out your credit card in public and enter the details, because you never know who is watching. So basically it’s all virtual and that is the innovation that we implemented – allowing consumers to make a transaction without using the credit card number ever again once it’s already stored in our system; a transaction that can take place in multi-currency from any region they are based.

We are living in a time and age where the mobile channel, the online channel and the traditional POS channel are all converging versus omni-channel and this convergence has attracted a large array of services that function on multi-function payment platforms. Have these changes brought any challenges in terms of fraud or security? And if yes, how does Allied Wallet address these challenges?
Andy Khawaja: It did bring in some challenges because for other payment providers, a lot of apps have been developed to accommodate mobile payments, I’d say it’s not 100% secure. What we’ve done at Allied Wallet is we implemented better security so we can accommodate that type of business, mobile payment via an Android Phone, via an iPhone or via an iPad. Our application is much more secure because from the minute that the card is swiped or punched in to the system it is automatically encrypted. Our software encrypts that credit card number instantly. Other applications that we’ve seen out there do not encrypt it until it gets to the data. That may be a problem because between the device and the data centre you’ve got a long way to go and if somebody has access to that IP or the internet connector where the iPhone is being used they can easily copy and paste that card number. That is the problem that others are facing. What we’ve done at Allied Wallet as part of the application development is that we’ve made it necessary for the encryptor to encrypt the card from the moment it’s been typed into the device.

Your company is listed as a Visa merchant agent. What are some of the benefits of this and what is the impact of this program for your company?
Andy Khawaja: This means that we are fully registered and fully compliant with the Visa rules and regulations and that means that our company is fully secured for credit card processing and we are PCI level 1 compliant and Visa usually look into the detail of the company and make sure that what we say is who we are before they certify us. And that means that we are approved to transact transaction and our merchants and consumers should be very comfortable that Visa certified the company as stage one processor which is an outstanding performance.

In your view do you think that the main trigger for innovation will come from the technology side or from the regulation side and why?
Andy Khawaja: I think actually it’s both. Regulation is set to play a big role in this context, because I feel that paper money is going to be eliminated probably by 2020 and the reason for that is that regulation goes more towards credit cards than cash. There are a lot of rules and regulations towards bank deposits, limitations and how much cash you can deposit, limitations on how much cash you can keep in your bank account without filling forms to report you to government agencies - and that is one step to minimize cash transactions. The reason behind it is to identify the spending habits of each individual so that governments can track you down and analyse how much you spend, how much you earn, whether you spend more than you earn, etc. That has driven the economy more into the transaction war which means that regulators, regulations and government agencies are implementing systems to make it very difficult for cash transaction to take place – that means that electronic transactions are going to get much stronger and are going to take over cash transactions. So everything will be turned into digital transactions. In the next five years the use of cash will probably drop by 30%, in the next 10 years the use of cash will probably drop by 50% to 60%. And the reason is that the new generations are waking into an e-commerce world and into a digital world and most likely people are going to be sitting at their laptops and making transactions instead of making physical shopping.

How will technology impact this innovation?
Andy Khawaja: Technology is going to be moving more into the digital transaction, more into e-commerce and the reason why is because the elimination of cash is going to boot more the digital transaction. If you are not spending cash you are spending more electronic transactions, there are going to be more challenges for big companies to compete with one another and build much better devices so that they can be sold and used. Technology has a big role into the digital transaction, to make it easy and simpler.

Allied Wallet has consolidated a leading position as an online credit card processor, a multi-currency merchant services provider, a payment processor so more in the e-commerce space. How does you company regard this mobile commerce revolution? What do you expect to see in the mobile space and how do you plan to take advantage of what is going to happen there?
Andy Khawaja: We see more revenue, we see an increase in sales and in business in general. If you go back to 1990, whatever you needed to transact with credit cards, you had to have a terminal, a POS, a big device sitting on the counter via which you had to swipe your card. Today, if you walk into the Apple store and other locations, they are transacting face-to-face on a portable device similar to an iPhone or an iPad and when the customers wants to make a purchase, they just need to swipe the card into the mobile device. Something like a portable scanner which is attached to a phone or any electronic wireless device which is connected to the internet. Mobile will be an enabler of transactions. Ten years ago cab drivers didn’t have a payment device that allowed them to charge the customer with a credit card and now you go everywhere in the world from Europe to China and you sit in the car and the cab driver pulls out an iPhone or some kind of wireless device swiping your card and charging you. That never happened back then. So the future of this is going to be less manual work and more electronic work. It’s going to be more consumer-friendly and on the other hand it’s going to be smaller devices, better technology, better speed and more accommodating to consumers and merchants so that they can be able to conduct a business in a very comfortable way.

In terms of integrating the mobile channel into merchants’ business model, what do you think they will do? How will they merge mobile with what they are already doing? What are the opportunities for them and the challenges?
Andy Khawaja: I would say that there aren’t many challenges because mobile devices come in with an application that they can purchase from whichever company they are processing with. Allied Wallet for example provides an API which is an application that can be downloaded, is extremely friendly to use and doesn’t require IT assistance. The merchant downloads the app, attaches the device and starts transacting. It’s all carried out via the API.

In terms of opportunities – the sky is the limit. Mobile payments and electronic transactions have made more people rich than anything else out there and the reason for this is the fact it allows individuals to go into business by themselves. I’ve seen people delivering products or doing crazy legit business with mobile payments and running house delivery, product delivery services, etc. If you order any product and you don’t have cash in your pocket then too bad, you cannot purchase the product or service you desire. But what is happening right now is that they are encouraging consumers to spend by transacting virtually with the mobile device. You can phone, place an order and when they come to your doorstep you can pay by swiping your card to a mobile device. This is making the economy a better place and encouraging people to go into business.

What about larger merchants? Do you see an opportunity there as well?
Andy Khawaja: Absolutely. Think of that stylist that visits your house – he used to get a cheque and it was hard for him because he didn’t even know if or when he was going to get paid. Now the stylist can come to your house and all you have to do is pull out your credit card and the stylist can have his iPhone on him and just swipe the card and collect the money. There are many business ventures out there taking advantage of this particular type of service.

Related to large retailers, there are a lot of food delivery businesses emerging in the US. You can go online and order the products and they can be delivered to your home and what you need to do is pull out your credit card and if it is a virtual mobile payment they can just swipe the card and collect which is perfect.

In the context of mobile growth, do you expect to see the mobile replace the wallet completely in consumers’ pockets in the future?
Andy Khawaja: Absolutely, I think that should take place in the next eight to ten years. Preferably, I would love to go out with no wallet in my pocket because I like to do transaction virtually with a fingerprint or electronically. I prefer that instead of carrying my wallet in my pockets and being worried about losing it all the time.

Do you think that the ecosystem will be favourable to this type of development? Do you think that enough merchants will deploy payment acceptance terminals in order to make this scenario feasible?
Andy Khawaja: Absolutely because for any product that you put out there, there are companies that adopt it and make sure it works. For example when they build a new iPhone there are always iPhone covers, iPhone chargers, there are always devices coming out there to accommodate the original device and yes when that product comes out a lot of technology companies have already built devices around it to make it happen. In my opinion the use of the fingerprint for payment verification is going to be the future of all payment transactions. Imagine going to a hotel or to a restaurant and all you have to do is put your thumb and they ask you to verify the amount and then immediately debit your bank account. Imagine you walk around without a wallet and all that you need is in your fingerprint. Your thumb is the transaction, it’s your bank account.