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The Payment Identity Problem (was: Re: Proof of Concept: Identity Credentials Login)

From: Manu Sporny <msporny@digitalbazaar.com>
Date: Thu, 26 Jun 2014 11:03:07 -0400
Message-ID: <53AC362B.8080707@digitalbazaar.com>
To: public-webpayments@w3.org
On 06/24/2014 07:03 AM, Adrian Hope-Bailie wrote:
> Notice that all of this can be achieved without the payer doing any 
> identity exchange.

Just a few recent links to highlight the problem w/ identity, Know Your
Customer, and Anti-Money Laundering. Identity isn't an edge case on the
Web when it comes to payments.

1. Identity theft wrt. payment fraud is a $24.7B problem in the US
alone, and startups are being funded just to deal with that problem alone:
 *
http://techcrunch.com/2014/06/26/blockscore-lands-2m-in-funding-for-making-i-d-verification-easier/
 *
http://techcrunch.com/2012/04/30/internet-identity-system-miicard-raises-2-5m-to-help-you-prove-you-are-who-you-say-you-are-online/

2. 72% of all papers to the Web Payments Workshop mentioned the lack of
a good identity capability on the Web as one of the biggest problems
related to online payments:
 * http://www.w3.org/2013/10/payments/minutes/2014-03-24-s2/#7

3. The cost of international KYC is rising with no impact on security:
 *
http://www.bankingtech.com/195632/cost-of-kyc-too-high-says-swiss-start-up/
 * It costs roughly $100 to onboard a new banking customer, which means
   banking services will not be available to the vast majority of the
   worlds poor that will typically have less than that in their bank
   account (thus earning fees on the order of several dollars a year
   for banks). Onboarding customers faster by having a solid identity
   solution will help make opening a bank account more affordable for
   the worlds poor.

4. SWIFT is considering a centralized KYC database due to the increased
cost and security issues:
 *
http://www.out-law.com/en/articles/2014/march/banks-sign-up-to-help-develop-centralised-kyc-database/
 * http://www.swift.com/products_services/kyc_registry_overview

5. Resume fraud and degree-mill fraud are now a $1B/year business:
 *
http://www.employeescreen.com/iqblog/cost-of-education-perpetuates-fake-academic-credentials/
 * http://www.counterfeitdegrees.com/

6. The "online identity" problem has been around for a very long time
now, and it's only getting worse:
 * http://www.zdnet.com/blog/digitalid/the-identity-silo-paradox/57
 * http://www.internetidentityworkshop.com/

7. The US Government has started an initiative to try and fix it due to
the lack of private industry movement in the area and the increase in
online security breaches.
 * http://www.nist.gov/nstic/

Those are just a few of the more recent links. There are many more
stories that come out on a weekly basis about fixing the identity
ecosystem on the Web, hopefully this small sample is enough to highlight
that the issues are bigger than most people realize.

-- manu

-- 
Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
Founder/CEO - Digital Bazaar, Inc.
blog: The Marathonic Dawn of Web Payments
http://manu.sporny.org/2014/dawn-of-web-payments/
Received on Thursday, 26 June 2014 15:03:32 UTC

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