Verifiable Credentials are Coming to Card Payment Rails

by | Nov 17, 2021 | Blog, Consumer Trends, Decentralized identity, DIDComm, Spatial Web

A ground-breaking development in decentralized fintech from Liquid Avatar Technologies, Dynamics Inc., and Indicio — and what it means for the future.

Liquid Avatar Technologies’ PassmateTM shows how decentralized identity will transform the world: by easily integrating into systems that already exist. The soon-to-be-launched Software as a Service — conceived by Liquid Avatar’s David Lucatch, enables verifiable credentials to run on existing payment rails.

It was the kind of insight that seems obvious after someone points it out: Businesses already have the infrastructure to handle debit and credit card payments and PassmateTM simply uses these to deploy verifiable credentials. They will be used, first, to deal with age verification for proof of purchases — a non-trivial risk for small businesses in Liquid Avatar’s home province of Ontario, Canada, where merchants can be hit with costly, livelihood-destroying fines if they fail to verify the age of their customers. But more importantly, it provides a simple and powerful deterrent to something far worse: the poor choices underage purchasers can make when they succeed in fooling retail clerks.

PassmateTM will enable a verifiable credential to be used at point-of-sale without the business having to add costly new infrastructure or requiring sales clerks to discern valid from fraudulent IDs — and the purchaser will be able to prove they are of legal age without having to divulge personal details like their exact date of birth or home address.

It doesn’t stop there. PassmateTM can handle all sorts of “proofs” without having to reveal their full content—such as Covid test status or any other qualification that might be necessary to access or purchase a product or service. It will be piloted in early 2022 in Ontario, then the rest of Canada, before an expected broader geographic rollout.

But it’s the ability to use verifiable credentials at point-of-sale card payment terminals and devices that sets up a paradigm change for identity in the marketplace. A financial institution, payment processor or card issuer can now think about adding a verifiable credential to manage proof of identity in a low-cost, frictionless way, and do so without a customer having to reveal unnecessary personally identifying information (PII). This has the potential to alleviate the pain of credit card fraud while avoiding complex data privacy compliance.

While the current pace of innovation in decentralized identity reveals its protean capacity to solve long-standing problems around authentication, compliance, and security, there is also the opportunity that the technology itself creates by doing things differently and enabling things that were not previously possible.

This is where we turn to DIDComm, one of the key technical elements of decentralized identity and one that makes PassmateTM possible. DIDComm is a decentralized communications protocol for peer-to-peer communication that can run over any existing transport but also function offline. DIDComm is where decentralized identity gets really exciting.

DIDComm is the next phase of Social
The ability to generate secure relationships and rich communication through DIDComm will have a profound effect on the way brands and businesses engage with consumers and consumers engage with brands and businesses.

As one marketing report into emergent behavior put it, “we’re entering a consumer-first landscape where relationships with brands are symbiotic, not top-down, and based on a system of shared ideals, values and mutually beneficial interactions.”

This is where DIDComm is a game-changer. By enabling rich “consumer-first” interaction in a privacy-preserving and secure way, DIDComm is the evolutionary path for social media. Instead of the one or the few speaking to the many and interaction mediated by an algorithm, it’s going to also be about the one-to-one. Instead of broadcasting for influence, it will also be about creating authentic relationships. Given current trends, this is going to be huge. Organizations and brands that master this technology are going to turn consumers into collaborators, stakeholders, and advocates.

And that’s not all…

The DIDComm of Things
With the proliferation of sensors and cameras, digital objects will be able to engage with non digital objects. This is the foundation of the spatial web and it will enable the creation of digital twins, smart factories, and smart cities. To work, all the connected “things” in the spatial web will need verifiable identities and to be able to communicate with each other offline in secure, peer-to-peer ways. Verifiable credentials and DIDComm make this possible.

Crash—crush?—the future
PassmateTM is a signpost for the near future. The ability to authenticate and trust data and relationships and communicate in new ways is going to change everything, slowly at first, then swiftly like a flood.

Indicio is incubating this future. We love working with visionary companies and organizations to make their visions of a better digital world come to life. You can contact us here.

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