an article written by Jamie Smith
When you pay with a credit card over the phone – ‘Card Not Present’ transactions – the business can’t physically see you. There’s a higher chance that it’s fraud, and more likely the customer disputes the payment. So the payment companies charge *more* for those remote transactions. But when you are physically in the store, the payment is called ‘Card Present’. Less likely to be fraud, and so they charge a *lower* fee.
What has this got to do with Digital ID wallets? Because we can begin to handle digital wallet transactions differently, if we know the customer is present or not.
Let me explain.
Soon, customers will be able to securely connect their digital ID wallet to their account. It will become a companion app to that service. First, the digital wallet will be used to share personal data with the company. But once the customer has that private, secure connection to their account, the wallet will be used to check for fraud.
For example, if a business wants to check that a customer is involved in a transaction, they can just ping the customer’s digital wallet. “Are you interacting with us just now?”
Assuming we do the right checks on the wallet side, like asking for a selfie biometric, then the customer MUST have approved the transaction. So just like credit cards, we will end up with two types of customer transaction:
1. Customer Wallet Present
2. Customer Wallet NOT Present
And as with payments, the wallet-less transactions will be exposed to *much* more fraud, and will cost the business more. The best bit? Digital wallets will crowd out the fraudsters.
Yes, bad actors will have their own fake wallets and fake AI agents and all the rest. But they won’t have *Customer Wallet Present*. Meaning fraudsters will be forced to move over to less trusted channels, like SMS and email.
…making the connected digital wallet *even more* valuable to the business.
‘Verified customer connections’ are why I’m bullish on digital ID wallets. Not just because I can easily share my ID and other personal data. But because I can also use it *across all* my customer relationships, and in any channel: online, in branch, on the phone and with my AI Agent.
Yes, we’ll need to make sure that the right person is approving transactions on the digital wallet. But with biometrics stored (and kept) on the device, it’s a damn sight easier than checking it’s the right person accessing your account woth a password.
The takeaway:
Your digital wallet just became your first line of defence. And your digital wallet just became ‘RegTech’. And if my bank – or any company for that matter – doesn’t accept my wallet as a new, trusted channel, then me and my AI agent are going to take my business elsewhere.
Digital wallets won’t just help fight fraud. They’re going to become a competitive advantage.
Banking 4.0 – „how was the experience for you”
„To be honest I think that Sinaia, your conference, is much better then Davos.”
Many more interesting quotes in the video below:
