Post Realtime Reconciliation-A Story

Kishore Nair
Nov 5 · 4 min read

e-Wallet in the digital & Gig Economy

As I waited for my TotallyMadeupCab (name changed to protect me from a lawsuit) driver, I got a call from him. Since I don’t speak Kannada fluently, I stayed with English. This one knew English a little, so he also switched to English. The conversation went like this…

Him: “Sir, where is the drop?”

Knowing that I have to go to JP Nagar from Hennur and it takes me over an hour, I said, “Look at the map”. Many drivers cancel if the distance is greater than a 30 min drive. We will not get into the horrors of Bangalore traffic here, though my fingers are itching to type that story as well.

Him: “Sir, are you paying by TotallyMadeupCab money (TotallyMadeupCab’s eWallet) or Cash?”. This is a trick question. If you say TotallyMadeupCab money, they may cancel. So I said “Cash”, even though I had TotallyMadeupCab money, I really needed to get to the place I was going, so I had chosen the cash option when booking the ride. On the ride over, I decided to get to the bottom of this.

I casually asked him, “why do all TotallyMadeupCab drivers ask if I am paying by TotallyMadeupCab money or cash? Isn’t it the same thing”? His response was enlightening. “Sir, if you pay by TotallyMadeupCab money, it takes 2–3 days to hit my account. Also, I have no way of knowing how much you paid”. The TotallyMadeupCab app only shows them that the fare has been paid and they need not collect any more money from the passenger. “I have no idea whether they are actually giving me the right amount owed to me or not. Since most customers pay by TotallyMadeupCab money these days, it is tough for me to fill up gas and buy food etc, during the day”. I didn’t believe the whole story, but for this post’s sake, let’s say there are no holes in the story.

My first thought was, “2–3 days for the money to hit his account? That seems like a long delay for TotallyMadeupCab to deposit the money!”. Then I thought, “oh, they have a reconciliation delay with the bank. That is why”, I said to myself. Then I thought, “Oh, if TotallyMadeupCab keeps the money for 2 days, they can earn interest on that amount and maybe use it for other things.’’

My thoughts wandered from that point on. Emerging DLT (distributed ledger technology) technologies can eliminate the reconciliation problem. So, the technology can instantly reconcile transactions and post to the ledger. Wonder what would happen to TotallyMadeupCab’s strategy and bottom line if they cannot hold the money for the aforementioned two days? Would consumers and businesses be the beneficiaries? What would happen if we eliminate the 30–60–90 day pay cycle? Vendors would have more liquid cash, which they could potentially redeploy for innovation and research.

Telecom Interconnect

Telecom interconnect is a major problem all over the world. For example, let us take the 6 paise telecom interconnect problem that we recently read about in the newspapers. If you are not familiar, the interconnect problem originates when I, whose telecom operator is A (let’s call them ATel) calls my friend Jay, who is on telecom operator B (let’s call them BFone). ATel has to pay BFone a service charge, which is regulated by TRAI (Telecom Regulatory Authority of India). So, let’s say that I called Jay and disconnected the call in 59.9 seconds. Due to a technical delay, the call dropped at the BFone end in 60.1 seconds. A two-hundredth of a second delay. BFone thinks that the call lasted 61 seconds and sends ATel a bill for 61 seconds, hence two units difference. ATel’s records indicate that the call lasted only 59 seconds and is expecting to pay only for one unit. Reconciliation problem arises. In a realtime reconciliation, audit and settlement scenario, this problem goes away, because as soon as the call drops on ATel’s side, a message is sent to ATel’s node in the DLT system, which instantly notifies the corresponding node in BFone’s system, a consensus is reached across all nodes in the DLT and now we have a single source of truth, so to speak. Since all of this is done without human intervention, both parties can agree to the time the call lasted.

In my opinion, business strategy and age-old practices will change as we replace a 600-year-old accounting practice of double-entry bookkeeping with a triple entry ledger and speeding up the transactions to realtime. Old practices that businesses have accepted as a way of life will no longer be needed. With more money and profitability, competition will heat up, thus reducing the price of goods. A lot more money will be deployed for research and innovation. Staffing strategies will change, growth models will have to be revised, business plans will fundamentally change. Brace yourself, impact is coming! This is no longer disruption. This is IMPACT!

Kishore Nair

Written by

Kishore is an award winning entrepreneur and innovative thinker with 25 + years of experience in Strategic Consulting, Data Analytics & Business Development

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