To advance the digital economy, smooth commerce and boost financial inclusion, billions of individuals across the globe need digital IDs.
To that end, Mastercard said earlier this month that it would work with the Republic of North Macedonia to develop digital identification solutions. Those solutions will broaden access to government services and streamline consumer interactions with businesses, amid the union of identity and payment credentials.
The partnership comes almost a year after Mastercard released its Principles of Digital Identity, which state that everyone has a right to a digital ID, that they have the right to keep information confidential and that identity data should be secure.
The Macedonia/Mastercard initiative follows a series of national programs that seek to digitize economies across France and Australia. The partnership also comes on the heels of the development of European standards known as eIDAS (electronic identification, authentication and trust services).
In an interview with Karen Webster, Ajay Bhalla, president of cyber and intelligence solutions at Mastercard, said that such initiatives address consumer pain points at merchants, but also open up avenues to accelerate access to vital public services.
At a high level, the programs make it easier for banks and service providers to ascertain that the digital identity has already been established, and also cuts down on the number of times an individual needs to authenticate themselves.
The partnership model – where Mastercard has applied its expertise in designing, constructing and delivering credentials – reflects that tackling digital identity creation is an ambitious undertaking, said Bhalla. No government, company or technology can do it alone, he added.
There’s a bit of urgency behind the effort.
“Identity is a big issue for consumers, who are spending a lot of time, energy and resources on proving who they are,” said Bhalla. He noted that through traditional means, individuals spend a lot of time and encounter a lot of friction across daily activities like opening bank accounts (without visiting a branch in person), taking out mortgages and traveling.
By using facial biometrics in tandem with mobile devices, Mastercard has been able to, as Bhalla stated, “give individuals ownership of their identity. They control their mobile devices; they control who they want to share their information with,” along with controlling the level of detail that can be shared.
Keeping the identity on the device prevents information from being stored on providers’ devices and can help thwart hacks, he added. A digital identity would bind an identity to a smartphone through biometrics or liveness detection, Bhalla said, to lock down use of that device to an individual.
Sources of Truth
As spotlighted in this space in recent weeks, establishing which documentation can be used to verify IDs has been a fragmented process. Call it a matter of agreeing on “sources of truth,” as Webster termed it.
Bhalla explained some of the roadmap behind establishing those IDs: Consumers have to agree to participate in the programs and must upload documents such as drivers’ licenses, national ID cards or passports to their mobile devices.
“We assist in the verification of the identity credentials on their devices,” Bhalla told Webster. “Then we work on ensuring that these identities can be used for either acceptance or government services.”
The first application in pilot programs such as those seen in Macedonia focus on electronic “know your customer” activity, which ties into remote bank account openings, management of pre-paid and post-paid mobile accounts and other business services. The IDs can also be used to verify that a would-be consumer is of legal age to, say, purchase alcohol or tobacco.
As Bhalla stated, the combined efforts of government initiatives, biometrics and identity data are helping to make payments “smarter.”
But beyond those initial use cases, as digital IDs gain traction, there is a landscape dotted by use cases and applications that extend well beyond payments. As Bhalla noted, the IDs can be used to verify a tenant’s identity to a landlord, determine qualification for healthcare services or enroll in school.
But that requires interoperability across private and public stakeholders – and interoperability requires standards between countries, said Bhalla.
This will be a multi-year project, he stated – but he added that “the pieces are falling into place.”