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EBAday 2021: Payments leaders race to perfect digital identity solutions

EBAday 2021: Payments leaders race to perfect digital identity solutions

The European Commission recently announced its plans to deliver a digital identity and wallet framework in a matter of years. Stating that “there is no time to lose”, the Commission is urging member states and the private sector to work in collaboration to deliver its first toolbox by September 2022.

With the European Union making no secret of its plans to accomplish an Open Finance and Open Data economy, it has become apparent that digital identity and identity verification are fundamental pillars to this journey.

Leading payments organisations are pursuing digital identity-related solutions will equal fervour. Identity verification has been a thorn in the side of booming digital payments, which are hampered by restrictive compliance protocols that not only add friction to every transaction, but are not as effective in combatting fraud or bolstering users’ privacy.

However, this is all changing. With robust digital identification solutions in place, payment providers will be able to deliver secure, smoother transactions for increasingly demanding customers, while positioning themselves to seamlessly transition to a world where digital identity has become part of the payments infrastructure itself.

Mastercard recently completed its acquisition of digital identity verifier Ekata for $850 million. At the time, Ajay Bhalla, president of cyber and intelligence at Mastercard, said: “Our focus will now be on bringing our talented teams together and advancing our identity capabilities to create a safer, seamless way for consumers to prove who they say they are in the new digital economy…Proving your identity is critical to creating trust in our increasingly digital world. And for those who do not have an official identification, they face greater barriers to financial inclusion.”

Rather than simply buying a digital identity verification solution, Stripe has announced it would build its own product, Stripe Identity, to meet this need. Designed to help online firms comply with age requirements, KYC laws, to reduce fraud, and to prevent account takeovers, the tool is built on Stripe’s own onboarding and compliance infrastructure which can be rolled out to customers for use within minutes.

Recent surge of interest in the space is perhaps to be expected, with ResearchAndMarkets.com predicting in 2020 that the global identity verification market is expected to grow from $7.6 billion in 2020 to $15.8 billion in 2025. Who knows what a flurry of government-led initiatives will do to fuel those figures.

American Express recently bulked up its fraud identification solution Accertify through collaboration, teaming up with other online fraud prevention companies to help tackle card-not-present fraud.

Tina Eide, SVP global fraud risk at Amex said: “the best way to drive fraud out of the digital payments ecosystem is for merchants and card issuers to share more data with each other at the moment an online purchase is happening…Our partnerships with Microsoft, Riskified and Accertify expand the reach of our Enhanced Authorisation solution to online merchants big and small, helping us to instantly identify and block fraudulent purchases. Working together to fight fraud benefits everyone.”

The Canadian identity verification firm Trulioo just closed a mega $375 million series D funding round which included the likes of Citi and American Express. The company, now valued at $1.75 billion, provides real-time verification of 5 billion consumers and 330 million business entities globally through a single API integration. Trulioo currently boasts the likes of Klarna, Revolut, Nubank, WorldRemit and Payoneer among its fintech clients.

On the announcement Steve Munford, CEO, commented: “This new round of funding will accelerate our goal to become an end-to-end identity platform. Our vision is to break down fragmented data silos caused by disparate identity networks, and we will work in partnership with TCV to expand our investments in product innovation, build out AI/ML capabilities and advance our global go-to-market strategy.”

Digital identity will be a core topic discussed at the Euro Banking Association and Finextra’s EBAday 2021. Running in digital format on 28-30 June for its sixteenth year, the event will welcome a host of board directors, chief executive officers and payments and technology heads from Europe’s leading banks, as well as selected fintechs and registration is now open.

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