ID&Pay: a way out of the identity-linked payment jungle

For businesses and private citizens, identity-related payments are now part of everyday life. More and more customer journeys on platforms involve identification and verification. But the explosive growth in digitalised payments and identification is being matched by the huge growth in fraud against service providers. Governments, increasingly concerned about the risks that come with digitalising identification and payments, are imposing stricter GDPR (General Data Protection Regulation) and privacy regulations to protect consumers' data. In turn, service providers must ask for more data from their users, many of whom have simply lost control over who has access to their data.

New regulations, such as the EU's GDPR, aim to promote privacy and data protection, while ongoing fraud is pushing businesses towards additional KYC (Know Your Customer) steps in order to guarantee the source of payment. But while these developments are helping protect the consumer, they are also having a negative impact on the customer journey.

ID&Pay tackles all these issues in a single B2B2C proposition. In an app on their mobile device, individual retail clients create an eID that the app securely stores in a centrally-controlled database. Once you have created an account with ID&Pay, you can then onboard with third parties and share only the minimum data elements required for that specific service. Having used your account to sign up to another platform, it is easy to control and manage the shared data and linked account within the ID&Pay app.

The rise of Open Banking and tokenised payment methods have accelerated the need for innovative solutions. During the ID&Pay onboarding process, the user not only verifies their ID and contact details but also their IBAN, at the same time authorizing ID&Pay to make future payments for them. When executing these payments, ID&Pay can thus guarantee the payment source, so the payee knows the exact user and account. In the near future, ID&Pay payments will replace SEPA Direct Debits, which means they can't be rejected by the payer.

Following the successful pilot, the aim now is to offer ID&Pay to service providers as a white label solution, leveraging the infrastructure of ID&Pay within the service provider's environment. In this case, users will simultaneously become a client of ID&Pay as well as the service provider, without leaving the environment. If needed, ID&Pay can even white label its wallet solution and keep cash positions in custody, held under the banking deposit scheme.

With a growing user base, the app of ID&Pay will be further marketed as a stand-alone service too, supporting instant onboarding but also active payments. In due course, ID&Pay will be able to offer Apple Pay-style payments linked to identity, so that consumers can use ID&Pay for in-shop payments or online. Controls can be built in so that, for example, a payment for alcohol will be blocked if the user is under 18 or a car rental will only go through if the user is 25+ and has a healthy credit history.

We believe that by offering multiple payment methods and white label wallets, ID&Pay can become the one-stop-shop for all matters related to identity, payments and cash administration.

The business model for ID&Pay aims to stimulate a network effect, leading to cumulative cost savings for service providers. All users will become ID&Pay clients, with their data stored in a centrally-controlled secure database. This means service providers 'share' the administration costs of 'their' users. Not only reducing their costs but also giving them access to a large database of potential users, making it easier to grow their own user base.

Want to know more about ID&Pay? Please contact Hugo Hazersloot, ABN AMRO Venture Lead.