Are you old enough to buy that drink? Are you eligible to get a cheaper train ticket? Can you get a discount on that museum entry fee?
There are lots of situations where the price of something is determined by your age or your profile characteristics, whether it’s a student discount, a concession fare for older travellers, or a membership or qualification you hold. This connects Identity to Payment.
So, if consumers could have their identity credentials digitally linked to their payment means, then the payment experience would be simpler, faster, and more seamless for both them and the merchants. Consumers wouldn't have to carry additional identification and merchants wouldn't have to spend time validating their customer's credentials.
A consumer would need to have a certified digital identity wallet sitting alongside their digital payments wallet and the two would need to be able to interact at the point of payment – whether that’s online, in-store or through another channel. There are two main elements of the ecosystem required to achieve this customer experience:
Availability of certified identity data – issuers of secure and certified identity known as ‘attribute issuers’ i.e. banks, government or other trusted entities.
A Digital Identity Wallet – enabling identity to be linked to payment means within a digital payment wallet such as Google Pay/Apple Pay.
Digital Identity and Digital Payments interacting
Until now, digital identity systems have been technically based on centralized or federated approaches, where data is stored by a trusted third party on behalf of users. Big techs such as Google or Meta have been providing identification services for the past decade.
But there is the ambition for more advanced approaches coming from governments and banks. Here, credentials are verified through a strict enrolment process and shared more cautiously. With some credentials being very sensitive, such as biometrics data, there is a growing concern over their increased usage, potentially making it easier to recreate 360-degree profiling of people, bringing security risks and fraud risks with it.
New approaches are emerging such as Self-Sovereign Identity and Decentralized Identity. These both have the ability to give back control of data to the users.
In both cases, the advantages are:
The user has full control of their data, critical for protecting their identity and privacy;
The user can make decisions on the methods and type of data for sharing;
And in some scenarios the user can decide whether to monetise their personal information or not.
A customer creates a digital identity wallet by having the credentials of age, profile and attributes certified by an online service, from an attribute issuer, such as a driving licence issuer, national identity issuer or passport issuer. This is then held in the Digital Identity Wallet of the user and used at the point of purchase in situations where the merchant is an acceptor of Digital Identity, and the purchasing scenario requires validation of some identity credentials. Similar to how a supermarket loyalty card works today.
Globally, there have been many different versions and implementations of digital identity:
In Germany, a user’s date of birth is encoded into the chip on a credit/debit card to validate age at non-attended cigarette vending machines. In New South Wales Australia, the driving licence, proof of age, and medical records are all linked to the state digital identity wallet held on a user’s smartphone.
In Sweden, thanks to the Swish mobile app and the cooperation of several major banks, there’s been a significant decrease in the use of cash. Using the Swedish personal identity number issued by the Swedish Tax Agency and their bank credentials through BankID, Swish also allows users to sign contracts and access digital public services.
In India, 99.9% of adults are identified through the Aadhaar, a biometrically secured national identification system. Aadhaar can be used for e-KYC for enrolment for telecoms and banking services, for example. It can also be used for digital payment and payment platforms like UPI. There’s a perceived risk with having such a centralised database which includes biometric data, increasing the potential danger of 360-degree profiling, and the risk of bringing multiple services down at one time.
In Europe, the eIDAS (European Digital Identity and Trusted Services) initiative coordinated by the EU, aims to bring a standard digital identity ecosystem to all 27 member states covering various use cases from opening a bank account to renting a car with a Mobile Driver Licence. It will also apply to strong authentication processes for the initiation of transactions in the field of payment services.
eIDAS is one of the ways Worldline is looking at how digital identity and payments are converging and what the future holds for both in the payments’ world. Worldline is part of a consortium EWC for the Large Scale Pilots on the EU Digital Identity Wallet focusing on travel, payments, and organisational identities. Worldline has also been selected by the European Central Bank (ECB) for prototyping a front-end user interface for the digital euro. Worldline is developing the peer-to-peer offline payments use-case.
In the future, we see that everyone will have access to a secure digital identity reducing costs for retailers and making the consumer experience better. Merchants, banks, and actors within the ecosystem need to get on board with the acceptance of digital identity to remain competitive and demonstrate the value and benefits to their consumers. While consumers need to become comfortable sharing their identity credentials in this way. Worldline will be present to support its 1,4 million merchants on the way to One-Click Payment thanks to the EU Digital Identity Wallet with the creation of the Worldline Digital Identity Hub.
About Lucy Whitehead
Lucy Whitehead is Global Product Director for the Mobile and e-Transactional Services (MTS) part of Worldline focusing on the transport vertical whilst having a keen eye on innovation and how new technologies are impacting payments for customers in the transport and mobility sectors.
About Colombe Hérault
Colombe Herault is R&D manager at ‘Worldline Labs – Customer eXperience and Payment’ team. Colombe has technical skills in domains such as in-store & mobile payment and conversational commerce. Nowadays, she builds upon her technical and innovation management background to identify new trends, develop innovative POCs, and support operational teams in their innovation process with clients. Her focus is around Seamless retail, In-Car & Autonomous Payment, and the Metaverse.
About Worldline
Worldline is a global leader in payment services and the technology partner of choice for merchants, banks, and acquirers. Powered by 18,000 employees in 40 countries, Worldline provides its clients with sustainable, trusted, and innovative solutions fostering their growth. Services offered by Worldline include instore and online commercial acquiring, highly secure payment transaction processing, and numerous digital services. In 2022, Worldline generated a revenue of 4.4 billion EUR.
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