Tap to Prove is the new Tap to Pay: RTP, meet Real Time Identity

Picture yourself back in the early 90s, standing in a long line at the bank, waiting to deposit a check or withdraw cash. Simple tasks like bill payments or transferring money required filling out forms or mailing checks, often leading to late payments and unnecessary delays.

In those days, online shopping was unheard of, and making international transactions could take days or even weeks. Carrying around wads of cash or a bulky checkbook was the norm, and the concept of financial privacy was all but nonexistent.

Until 1994, when the Stanford Federal Credit Union launched the first-ever online banking service, your finances were wherever your brick-and-mortar bank was.?

Gradually, as technology advanced, the world of payments started to transform. ATMs sprouted up in more locations, allowing for easier access to cash. Debit cards made it simpler to pay for goods and services without the need for checks or cash.

The rise of e-commerce brought about digital payment platforms like PayPal and Venmo, and smartphones paved the way for mobile wallets like Apple Pay and Google Wallet. Financial services started to converge, making it easier than ever to manage your money from anywhere, at any time.

Today, we've reached a point where financial transactions can be made with just a few taps on a screen. Whether it's scanning a QR code at a coffee shop or tapping your phone on a contactless terminal, the speed and convenience of payments have reached unprecedented heights. The world of finance is now at our fingertips, enabling us to carry our banks with us wherever we go.?

To state the obvious: the acceleration in payment technology outstripped how we verify and manage identity.?

Painstakingly long identity verification

Right now, financial identity is the pebble in every consumer’s shoe and currently sits within the top 5 concerns for most major players in the financial industry. Abandonment is one issue: according to a report focusing on financial institutions, in 2022, 68% of those who begin onboarding at a financial institution abandon the process. These high abandonment rates lead to lost customers and missed revenue opportunities for businesses.

AML is another. While financial institutions now have robust Anti-Money Laundering (AML) processes that include risk-based Know Your Customer (KYC) procedures, 90% of money laundering still slips through the cracks while the average consumer is routinely burdened with increasingly onerous form-fills, surprise step-ups, and otherwise unpleasant experiences.?

While repeated verification, monitoring, and other ongoing analysis is in the interest of a safe banking experience, not everyone is comfortable with it, and many are just routinely annoyed. Users involved in high-risk transactions may not mind the wait, but the average consumer conducting low-risk transactions can—and does—become frustrated with lengthy KYC and verification tasks that are seemingly disproportionate to the size or simplicity of the transaction. Unsurprisingly, this is a drag on NPS and TLV. As payment frequency and velocity increases with the launch of Fednow and continued movement toward real-time payments (RTP), frustration will only intensify.?

With faster payments comes faster fraud. From phishing scams to identity theft to push payment fraud, the list of fraud flavors is long. 91% of respondents to Alloy’s 2021 state of fraud report said fraud increased year-over-year since 2021. The most prevalent type of fraud? First party.?

Not all first party fraud is created equal—there's way more to it than I can put in this article. However, there's at least one pervasive consequence: the amount of digital financial surface area that begs users to reassert something about themselves is growing and in need of simpler ways to provide assurance on-demand around things like

• Are you who you say you are?
• Is this device still in your possession?
• Are you still who you said you were when you joined?
• Are you authorized to use this account/payment method?

Some of this is being tackled on the behavioral side—the "what," if you will. Still, the amount of friction consumers must endure answering and re-answering these questions is only ratcheting up. Not only are we spending more time maintaining our digital financial identities, we continuously manage these processes in separate silos with each institution we join and use.

We’re on a collision course: the need to check identity, specific attributes, and forms of authorization is growing to match the pace and complexity of enrollment, ID management, and payments protection. This is running headlong into the fact that your, my, and everyone else’s identity is fragmented into more digital siloes than ever and should travel with us in a verifiable way.

So, how do we solve for the "who"? How do we get to a real-time identity that meets the needs of real-time everything else? Can speed, accuracy, security, and privacy be complementary?? Yes. Here’s how.?

Identity that travels with you

The reason tap to pay is convenient is because your banking service travels with you.?

• Your card is “just there” when you see Google/Apple Pay
• Your bank account is "just there" when you see the Paypal button;
• Your Venmo balance is your preferred payment method for reimbursing your friend by default—it all “just works.”?

What if your identity “just worked” like that?

That’s what we’re solving for at Portabl—users build and control financial identities that are reusable, composable, and shareable-on-demand across an array of financial situations.?

By standardizing how different types of identity checks are performed and scoped, we enable businesses to embed composable ‘tap to prove’ functionality that meets different needs across the customer lifecycle while protecting themselves and their ecosystems across

• KYC onboarding & originations
• Step ups & progressive onboarding
• Routine checks, reconfirmations, and refresh
• P2P?

and more, all while guaranteeing transparency and minimizing the overall burden consumers feel from constantly sharing their PII.

Just like “tap to pay”, the processing time for “tap to prove” will be a matter of seconds whether the relying party needs to confirm a lot or just a little data. You might be wondering… how does this work? And why is this a big deal?

A key ingredient in the Portabl stack is Verifiable Credentials (VC), a (relatively) new form of cryptographic verifiability that allows trusted, authentic information to be more easily controlled by consumers and shared on-demand in simpler, more secure ways than traditional data collection (forms) or server-to-server connectivity.?As the search for a new identity verification standard continues, we're excited by the way a verifiable credentials-based approach balances a renewed focus on consumer privacy and mobility (see: Dodd-Frank 1033) with much needed improvements to attribute sharing in service of modern AML and CIP programs.

To put a finer point on things, VCs let us build the passport and rails for standardized, user-first financial identity. Similar to how individuals accumulate stamps in a physical passport, VC-based methods of data verification, aggregation, and management enable trusted issuers and verifiers (i.e. regulated entities, apps, etc) to ‘sign’ the data and vouch for its correctness and authenticity on behalf of users, a key pillar to its reusability. This leap in identity management and verification is a huge step forward for user-permissioned data. It reduces verification friction for both consumers and institutions while improving security, privacy, and accuracy.

There are many more components to the 'tap to prove' / RTI recipe than what I could touch on in a single article; the team is excited to release more technical write-ups soon. In the short term, stay tuned for our next piece covering "tap to issue" and what that means for building trusted identity networks and the future of data consortia.

For more on what we're building, check out getportabl.com, and keep an eye out for major site updates next month!