Thursday, December 29, 2011

Digital identification and mobile payments


The fundamental problem with all payment systems is to accurately verify the identification of the buyer. If one can be hundred percent sure that the identification of the buyer is absolutely accurate, one can be hundred percent sure that the payment is not fraudulent. In the physical world this is achieved by verifying physical documentation (for instance ID documents, fingerprints etc.). The problem is of course much more difficult in the digital world.

That is why solving digital identification is almost the same as building a fraud-proof digital payment system. This is emphasised by a recent announcement from Paypal (Read here). In this announcement, Paypal aims to become the custodian for their clients' digital ID's. Similarly, deploying well-designed mobile payment solutions in emerging markets is similar to rolling out robust identification systems. One should consider combining both problems: rolling our national ID systems at the same time as deploying mobile payment systems.

2 comments:

Victor Asemota said...

Sometimes I wonder if you read my mind :) I have been thinking of this recently after I saw the Paypal announcement.

While a lot of people are concerned about money laundering, fraud is my biggest concern because it can destroy confidence in a payments initiative completely

RICA and Mobile Payments are converging at MNOs so this is not too far away in the emerging markets.

Trust however is a double edged thing. The buyers have to also be sure of the sellers as well and while Paypal's model is a smart move I will also bet on African initiatives like https://www.trustfabric.com/ to change the landscape forever.

johnberkowitz said...

Well I agree with Victor, that this can money laundering can be a big issue, when it comes to mobile paying. I found this article about electronic payment and I was surprised how many possibilities you can use nowadays.
There will always be people who just don´t care about the buyer. So it is hard to control such a stuff.
Paypal is one of the best electronic services and I´m using it with big confidence. I´m not sure if there was any big fraud connected to Paypal, but for me, it is a reliable way how to pay on internet. The new types are more unclear and I heart many people complaining about the quality of the services provided