Thought Leadership

Digital Doesn’t Work: Identity as Currency (Part Two)

TL;DRTomas explains why digital identification verification systems don’t always work and discusses how Hyperwallet has tackled physical ID authentication.

When you send an e-mail to a coworker, do you ever worry that the message will get lost somewhere in cyberspace and accidentally end up in your boss’ inbox? Of course not; you simply trust that the e-mail platform will deliver the message to the intended recipient. This is because e-mail providers have a number of checks and balances in place to identify and authenticate users:

  • Both the sender and recipient must have unique accounts in order to send an online communication.
  • The sender must know the recipient’s unique address.
  • The recipient must input a unique, confidential password into the system in order to accept the message.
  • Both the sender and the recipient trust that the email provider transmits messages over a secure network.

A similar trust and authentication relationship exists when sending money using an online banking system:

  • Both the sender and the recipient must have unique accounts with a financial institution in order to participate in a funds transfer.
  • The sender must know some aspect of the recipient’s account information. (Depending on the system, this could be an e-mail address or bank account number.)
  • The receiver must input a unique, confidential acceptance code or password in order to verify they are the intended recipient of the transfer.
  • Both the sender and receiver trust that the bank is making the transfer over a secure network.

But what happens when you need to send money to a person who doesn’t have a bank account? What kinds of checks and balances are in place to ensure that the intended end recipient is the person who actually receives the money?

As on-demand services begin to spread across the globe, more and more organizations are struggling to find earnings distribution systems that can securely service an underbanked population. As I mentioned in my previous post, the challenge of confirming digital identity has been mitigated by a growing number of authentication companies. But when it comes to verifying people who live in emerging markets—places where credit scores, government databases, and basic bank account adoption is sparse or even nonexistent—organizations need to rely on physical methods of identification verification.

#Ondemandeconomy organizations are struggling with how to pay an underbanked population Click To Tweet

At Hyperwallet, we’re well-versed on digital verification tools; our worker payout platform features tight integrations with some of the industry’s best identity authentication systems. But more importantly, our platform comes with built-in global offline authentication capabilities.

Did you know? @Hyperwallet's platform comes with built-in global offline authentication capabilities Click To Tweet

A Man Walks into A Post Office…

Spoiler alert: No, we didn’t build an offline identification network that spans the globe from scratch. Instead, we’ve spent years building a global partner network that ensures end-to-end visibility and a secure, in-person identification verification process for unbanked payees. The process is simple:

  • The worker opts to pick their earnings up as cash at one of our partners by selecting this payout option within their Hyperwallet account.
  • A unique ID number is issued that corresponds with this request.
  • In order to accept their earnings, the recipient must present this ID number and a piece of personal identification at the time of pickup.

Our deep integration with these partners enables us to pass important identifying account information in a secure fashion. From there, it’s our partner’s responsibility to confirm that the person picking up the funds is the intended recipient.

While the foregoing is arduous, it yields an incredible benefit to our marketplace clients. Our proven capability to confirm identity (we have a 99.6% success rate) is extensible far beyond delivery of earnings to workers. The tethering of validated identity to a live account allows us to provide services like loyalty and merchant rewards redemption, and underwriting for thin file lending.

Applications for global identity verification systems like @Hyperwallet's are practically limitless Click To Tweet

And that’s just the beginning. In the future, we could even publish our one-to-one payee verification system to a broader networked ecosystem. Applications for global identity verification systems like ours are practically limitless.

More on that in the next part of my Identity as Currency series.

Read Tomas’ previous posts in the Identity as Currency series:


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