Thought Leadership

Nobody Knows You’re a Dog: Identity as Currency (Part One)

TL;DRIdentity, specifically the issues surrounding global identity authentication, matters in the world of payouts, especially in emerging markets.

“On the Internet, nobody knows you’re a dog.”

Originally published 22 years ago in The New Yorker, this seemingly innocuous adage by Peter Steiner has grown to symbolize a bounty of issues surrounding Internet privacy and identity authentication. In the modern world of masked IP addresses, hacked data, and user aliases, identity verification has become the cornerstone of compliance. The stakes are high when it comes to data fidelity—especially when that data is responsible for the distribution of worker earnings.

In the new economy, identity verification has become the cornerstone of compliance. Click To Tweet

Fidelity, Rails, and the Issue of Globalization

In order to appreciate the requisite role of identity in the evolving world of worker payouts, let’s first look at how identity authentication functions in basic financial services scenarios. When opening a bank account, for instance, generally speaking an individual is required to physically go to a bank branch and supply two pieces of government issued ID as part of the verification process; in this instance, government public records provide the verification layer. Now, when you buy something and pay with your bank-issued Visa or MasterCard, your identification is verified through that financial institution. Visa and MasterCard’s payment rails, bolstered by the issuing bank, are responsible for verifying your identity and thus affirming the fidelity of the payment transfer.

But what happens when you try to send money out to your workers or suppliers, rather than take money in from your consumers?

As we all know, the Internet removes the physical and geographical boundaries that have traditionally hampered global commerce. This extensive reach, when paired with a third party verification system—such as Visa’s rails—provides an exceptionally safe and secure inbound identity verification system, which is great from a merchant payments perspective. However, when it comes to validating outbound payments to globally dispersed workers, the Internet’s expansive connectivity actually acts as a weakness, making the network susceptible to vulnerabilities. There are no Visa-like rails in place to provide the necessary third party protection and validation on outbound payments. Up until this point, there’s been no way to ensure fidelity—a big problem in the new economy.

Finding Solutions for the Anonymous Population

It’s worth noting that, in Western countries at least, the challenge of confirming digital identity has been mitigated by a growing number of authentication companies. Designed to streamline the validation process, these digital systems make it easy for new economy companies to verify information against public databases through the use of digitally-collected identity proofs (i.e., government-issued ID or credit scores). Users simply snap a picture of their ID and the information is mapped to the applicable public database in order to verify a person’s identity.

It’s a seamless process, provided all of your users exist in a public database. But what about people who are without government identification or bank accounts in the Western world? What about workers who live in emerging markets—places where credit scores and government databases are sparse or even nonexistent? Currently, there is no viable method for digitally confirming the identity of these individuals.

For the Western world, this is largely an academic problem; something that’s mentioned at conferences or discussed only in theory. But at Hyperwallet, it’s an operational necessity. Our platform runs on global identity fidelity. We need to be able to validate the identity of the payees on our platform regardless of where they live. From San Francisco to Sri Lanka, that’s part of our promise and service offering.

The Hyperwallet platform runs on global identity fidelity. Click To Tweet

Which brings us to the obvious question: How can you quickly and easily verify an individual’s identity when there are no accessible public records available? I’ll share Hyperwallet’s approach in part two of my Identity as Currency series.

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