In the ever-evolving landscape of digital identity, understanding the intricacies of digital identity wallets is essential.
We have gathered a team of renowned experts: Mark Haine, Don Thibeau, Nick Mothershaw, and Daniel Goldscheider, to shed light on this topic.
‘Ants and bees can also work together in huge numbers, but they do so in a very rigid manner and only with close relatives. Wolves and chimpanzees cooperate far more flexibly than ants, but they can do so only with small numbers of other individuals that they know intimately. Sapiens can cooperate in extremely flexible ways with countless numbers of strangers. That’s why Sapiens rule the world, whereas ants eat our leftovers and chimps are locked up in zoos and research laboratories.’ Yuval Noah Harari, Sapiens
As identity plays a crucial role in our evolution, cooperation, and knowledge-sharing become paramount. At The Paypers, we are committed to keeping you informed about the latest developments in digital identity. Our history with these experts has been fruitful, with their valuable articles about interoperable digital identity solutions like the Global Assured Identity Network (GAIN) or presenting some challenges with the European Digital Identity Wallet to our fincrime report (2022 and 2023 editions) and talking about building a trust layer that puts the individual in control.
In this interview series, we delve into their past projects, including GAIN, and explore their current endeavours with the Open Wallet Foundation. Together, we uncover the essence of digital wallets, their vital building blocks, the envisioned European Digital Identity (EUDI), the role of banks, fostering competition among wallet solutions, and what lies ahead.
Join us on this captivating journey over the next three instalments as we delve deeper into the world of digital identity wallets.
The recipe for a digital wallet consists of three key ingredients: open technical standards (such as OpenID), open-source software (provided by the OpenWallet Foundation), and open governance (led by the Open Identity Exchange - OIX). When a bank intends to build a wallet, they have two options: either create everything from scratch independently or leverage the benefits of open-source software, open standards, and open governance.
From a consumer perspective, it might not be a good idea to call these products ‘identity wallets’. Let's imagine I was trying to sell you a physical wallet. You like its colour and fabric, and you're ready to buy it. But then I tell you that it will only work for your driver's license. You can't put your bank card or your golf club card in it. It's a wallet that only works for one thing. You wouldn’t buy it, right?
The closest thing we have to a digital wallet is the kind you see on your phone, like the ones from Apple or Google. They are multipurpose wallets. In these digital wallets, you can put your credit cards and debit cards, but also other things. For example, they can hold your airline tickets, driver's license (in the future), FIDO Passkeys (which will replace passwords), and even digital versions of your car keys and hotel room keys, the key to your apartment, or your home.
Many of us used wallets to store information related to health, such as your COVID vaccination status. So, to sum it up, these apps are much more than just identity wallets and will become as important as web browsers.
There's a crucial distinction between a physical wallet and a digital wallet. With a physical wallet, the user directly interacts with it, and it's clear what they're doing with the credentials they have inside. Humans have a natural inclination to handle physical objects, thanks to our evolutionary familiarity with them. However, the capabilities of a digital wallet go much deeper and wider.
In the case of a digital wallet, the user is not in control. It is a piece of software provided by another entity, even if it's the Open Wallet Foundation offering open-source software. Typically, it will be a company providing the wallet that can interact with your credentials. This difference is quite significant, and in some ways, it's unfortunate that we named it a ‘wallet’ because it's not the same as its physical counterpart.
Payment cards fall somewhere in the middle for me. While presenting a driver's license or passport to Airbnb hosts may not involve a direct background check, it doesn't carry the risk of potential abuse like other credentials.
The Open Wallet Foundation is an organisation that focuses on the development and promotion of open-source software for digital wallets based on open standards and developed with an open governance model. Its mission is to facilitate the creation of interoperable and secure solutions while promoting transparency and collaboration.
The Open Wallet Foundation is not involved in creating technical standards but works with SDOs such as Open ID Foundation, DIF or Hyperledger. Other use cases, such as car keys or hotel room keys, have their own dedicated standards from organisations like the Car Connectivity Consortium or IETF.
We also don’t interfere with rules, regulations, and trust frameworks in the digital identity space. These frameworks can be established by private entities or sovereign countries. For instance, the European Union, the Department of Homeland Security, or the Treasury Department in the United States may have their own distinct rules and interpretations of regulations.
The Open Wallet Foundation really focuses on open-source software as an intermediary between the standards and the wallets. By employing open-source software, participating entities can benefit from cost savings, increased security, time efficiency, and improved interoperability. It helps to ensure that different wallet implementations do not create friction or compatibility issues due to varying interpretations of the same open standards.
An analogy can be drawn from the browser world, where popular browsers like Google Chrome, Microsoft Edge, Samsung Internet, and Safari are all based on open standards and open-source software. Similarly, the Open Wallet Foundation aligns with the principles of open-source development and open governance.
The foundation's approach allows anyone to use and contribute to the Open Wallet code for free. Companies, non-profits, and governments that are part of the foundation collaborate to establish a more democratic process for creating and evolving the code, ensuring a collective effort towards achieving the mission of the Open Wallet Foundation.
While we have only just begun in February 2023, we are fortunate to have both Visa and American Express as founding members of our project. While we don't have an official announcement from Mastercard yet, it is public that they are engaged in the discussions.
Initially, we focused on collaborating with the card schemes because it provides a more streamlined approach to working with a smaller group compared to thousands of individual banks. However, our aim is to collaborate not only with the card schemes but also with banks around the world.
Stay tuned for our next instalment, where we uncover the latest updates on the Global Assured Identity Network (GAIN) and unveil the compelling reasons why banks should prioritise building identity wallets. You won't want to miss it!
About Daniel Goldscheider
Daniel is the Founder and ED of OpenWallet Foundation, a consortium of companies and non-profit organisations collaborating to drive global adoption of open, secure, and interoperable digital wallet solutions as well as providing access to expertise and advice through our Government Advisory Council. He is an avid advisor and investor in numerous fintech startups.
About Don Thibeau
Don Thibeau serves on the Board of the OpenID Foundation after 10 years of service as Executive Director. He was the founder of Open Identity Exchange and now serves as its Vice Chairman. He currently works in early-stage venture funding.
About Mark Haine
Mark is an engineer and entrepreneur who has focused his career on building solutions that enable business and mitigate risk largely in financial services. Mark has helped organisations navigate the complexities of securely enabling third-party access to data via APIs in tightly regulated environments.
About Nick Mothershaw
Nick Mothershaw is Chief Identity Strategist at the Open Identity Exchange (OIX), a non-profit trade organisation on a mission to create a world where everyone can prove their identity and eligibility anywhere through a universally trusted ID. Working with organisations across the globe, Nick is leading the development of clear guidance around inter-operable, trusted identities. In his previous role as Director of ID and Fraud at Experian, he led the development, launch, and operation of a full ‘Identity as a Service’ solution – the first live example of a digital ID that is seamlessly interoperable across the public and private sector in the UK.
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