2023: The Year Digital ID Reaches Your Wallet (and Changes How You Pay)

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Wallet-based digital ID will create a wedge between universal wallets and payment apps, as embedded finance product offerings converge on feature parity over time.

Author: Christopher Miller
Published on: December 15, 2022

2023 is the year of digital ID, as regulatory bodies, standards organizations, governmental agencies, and technology providers have worked out the details and are launching digital identification (ID) features at a scale that will impact consumer behavior within and outside the payments use cases that have dominated wallet functionality to date. Mobile devices are effectively the “super app” that can subsume all use cases, and operating system/OS-specific wallets are the best situated to develop and drive adoption of digital ID. Both the costs of developing a digital ID program and the limited appetite for new payments methods suggest that  the major OS-specific wallets—Apple, Google, and Samsung–are best situated to take advantage, yet each are at different levels of maturity in the U.S. market. The steady rollout and adoption of digital ID can in turn incentivize consumer adoption of wallet-based payments. Future development of digital ID for online (nonmobile) use will also present new opportunities to solve KYC/AML (know your customer/anti-money laundering) challenges in the payments and financial services industries.

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