Decoding Digital Identity: What’s in Store
How virtual credentials are set to transform the e-commerce landscape and deliver global change for the good of societies
In the three decades since the birth of the World Wide Web, the digital landscape has expanded at an incredible rate. Over half the world’s population is now online and, with one million new users every day1, global penetration is expected to grow to 75 per cent by 20222. Online access may be increasing rapidly but, according to the World Bank Group’s 2018 #ID4D Global Dataset, nearly one billion people around the world, including around one-third of sub-Saharan Africa, do not have any form of identity3 by which they can prove who they are. As a result, these individuals are locked in a never-ending struggle to access education, financial services and formal employment. With the negative repercussions for nations being so acute, the United Nations has set a target to provide legal identity for all by 2030 as part of its Sustainable Development Goal #16 to promote peaceful and inclusive societies.4
The advent of digital identification (eID) promises to be transformative. Defined by the World Bank as: “…a set of electronically captured and stored attributes and credentials that can uniquely identify a person”5, eID works as a consolidated digital identity that authenticates an individual across multiple systems and platforms, typically using specific high-security credentials such as biometrics.
An estimated 3.6 billion global citizens will be in possession of e-ID by 20216. Over 40 different eID programs are already in play, such as the Kingdom of Saudi Arabia’s biometrics-driven National eID card scheme incorporating the holder’s passport, driving license and other personal data, and South Africa’s smart ID card. Last year, in addition to its mandatory eID card the United Arab Emirates introduced UAEPASS, a mobile-based national digital identity and signature solution bundled with access to government services under one unified registration and authentication process7.
Magdi Amin, Managing Director, Omidyar Network, said, “There are opportunities to have a positive impact at all stages of the identification process from design, to national implementation to cross-border recognition. We’ve seen a number of countries across Africa motivated by the opportunity to unlock more economic and social opportunity, and they are using the Good ID approach to include, benefit, and protect everyone. All identity programs require careful stewardship to ensure they remain a force for good, and that starts with prioritizing data privacy and security.”
“Transitioning to good digital identification and the widespread use of digital payments has the potential to deliver tremendous economic value to governments, businesses and individuals. Getting it right requires a multi-stakeholder approach along with globally accepted standards to help ensure broad adoption and connectivity to the international financial system. To help ensure a principles-based approach to the use and security of processes and technologies that ultimately drive trust in our payments ecosystem, Visa is taking a leadership role with industry standards bodies like the FIDO Alliance8 (Fast Identity Online) and EMVCo,” says Andrew Torre, Regional President for Central and Eastern Europe, Middle East and Africa, Visa Inc.
While few people would leave the front door of their home wide open, many do the equivalent online. Currently, online users juggle a multitude of identities for a myriad of purposes. Without these various usernames and passwords, email addresses and social media profiles being under constant and vigilant protection, many individuals are left vulnerable to identity theft. The mission of the FIDO Alliance is to deliver authentication standards to help reduce the world’s over-reliance on passwords.
“The ability to securely, efficiently, and seamlessly identify consumers and authenticate their transactions is vital for the continued growth of m-commerce and e-commerce,” says Neil Caldwell, Head of Merchant Sales & Acquiring for Central and Eastern Europe, Middle East and Africa, Visa Inc. “Resolving the issue of how to securely handle digital identities is critical for more consumers and merchants to reap the benefits of the digital economy. As an industry, we have to agree on the value and importance of facilitating financial inclusion and access for all. By doing so, we will enable effective and open dialogue that will help us to navigate towards a more secure and inclusive global future.”
The Open Banking initiative under Europe’s Revised Payment Service Directive (PSD2) potentially benefits both merchants and customers by means of integrated API-based service models that facilitate the sharing of personal information in a more secure, private and frictionless way. For merchants, the initiative is likely to reduce theft and fraud through more robust customer verification processes and, at the same time, enhance the customer experience with more effective personalisation, resulting in reduced abandonment rates, increased sales and heightened loyalty.