Less than a decade after its launch in 2009, India’s Aadhaar digital identity system was adopted by 99% of the country’s population, enabling hundreds of millions of previously unbanked people to participate in the digital economy and the digital economy. local financial system.
Mastercard wants a unique model
Now, Mastercard unveiled a model to replicate that feat around the world, which also frees merchants and service providers from the manual process of validating the identity of customers.
The idea is that the digital identity replaces the paperwork and the official identity document that is currently needed to do everything from opening an account with a public services company, contracting an online payment service or renting a car or a department.
“Identity as we know it is a great suffering for all,” Ajay Bhalla, the president of intelligence and cybernetics solutions at Mastercard, told Financial Times. “This means that you can really have a digital identity that can be entered into a device and used anywhere in the world”.
Giving identity to people
In addition to ending the nuisance and giving identity to people who are currently outside the financial system, the program could also reduce fraud because it will be more difficult for someone to assume the identity of another person (a big problem for some online payment systems)
Last week’s announcement focused on MasterCard’s Digital Identity Principles, which support the system. These principles focus on the rights and ownership of data, confidentiality, consent, transparency, security and inclusion. Thus, this model responds to a fundamental individual right: “I own my identity and control my identity data”.
Are the logistics vague?
Bhalla sees those values as vital to the credibility of the system, and therefore its adoption. Details about the logistics of their operations were vague. Bhalla said it is intended for banks and commercials to “pay for it” but Mastercard “has not yet shown any pricing model”.
“We have discussed this with our banks, with the merchants, with the people of the collaborative economy, and there is a very clear need” Bhalla said. “We have great confidence that once launched we will receive a broad acceptance of this service”.
Derek White, the global director of customer solutions at BBVA, told the Financial Times that “many of the banks and fintech are already working on very similar solutions” to what Mastercard is doing, including the Covault venture supported by BBVA, which facilitates the “creation and private exchange of secure digital identities”.
“What Mastercard is looking for is scale, the potential flexibility of its tokens to verify identity or simply make transactions,” White added. “What we’ve seen repeatedly in areas like technology linked to finance is that large-scale adoption is vital to the success of any specific platform.”
Mastercard works with 20,000 banks around the world, and with millions of merchants
“There is a lot of time left for consumers to understand the concepts of centralized identity management,” said Colin Walsh, CEO of online bank Varo Money.
“Regulators still have to be comfortable with that, and there’s likely to be a period of twists and turns for the new technology to meet the requirements”.
In fact, regulators are likely to step on the brakes on digital identity systems. In New Delhi, the Supreme Court of India last year ruled against the plan to integrate data from mobile phones to digital identities, and blocked the access of companies to biometric and demographic data of citizens for privacy reasons .
Also published on Medium.