There's still a gap in the mobile ecosystem that forces people to cling to leather and plastic, but there may be a way to shift to a mobile-only economy, contends Credntia's Cody Winton.
"Apple Pay, Android Pay, Samsung Pay and other apps try to solve financial hiccups, where users pay for things," said Winton, CEO of the Birmingham, Ala.-based digital ID company. "We are focused on identity and proving who you are."
Credntia's presently building a cloud server to expand its capabilities to work alongside mobile payment apps as an ID option, a concept that's had mixed results in the past but is getting another look as general mobile usage matures.
Credntia, which is available for iOS and Android devices, offers what amounts to an identity card that resides on a smartphone—users upload a photo and other information that can be used in a variety of ways. Users can show the app as an ID to get into a building, a store or a club. Or they can upload their driver's license, student ID, passport or auto insurance card. They can also e-mail their ID to a car rental company or other service that requires a photo ID.
"There are certain stores that will ask you for a photo ID for purchases over a certain amount," Winton said. "This ID can reside alongside the payment app so the ID and the payment happen as part of the same experience."
Other use cases include purchases of wine and other products where proof of age may be required. "If you can keep people from having to go to two places to complete a transaction, that is easier for everyone," Winton said.
Credntia uses Touch ID and encryption to protect user's data, and does not charge users. It makes money through its business partnerships. The company's pitch is ease of use and encouraging mobile adoption. If consumers are using their mobile phone to store their driver's' licenses and passports, they are less likely to carry their physical wallets, and plastic cards, which encourages mobile payments, Winton said.
"If a consumer forgets his or her wallet, and needs to show a driver's' license, the app can speed up that process," Winton said.
Mobile photo ID apps have been tried before in the payments industry with mixed results success. About four years ago, PayPal tested photo ID payment system with partners such as TouchBistro. And the demise of Square Wallet was attributed by some critics to user friction of Square's similar mobile photo ID system.
The challenge for Credntia is getting companies to accept a virtual identity card. Credntia's been mostly used thus far for airport terminal gates, hotels and meeting drivers at pickup. Winton did not identify clients or partners, but said Credntia's working to forge partnerships with retailers and payment companies that will spread acceptance. The timing is right in the current for such a solution because people are using mobile devices for more functions that in the past, and want a user experience that ties functions such as ID authorization more closely to payments, Winton said.
Analysts say the model has a chance to succeed, but it does face an uphill battle.
"I see connecting a digital and online identity as one of the biggest challenges financial services, commerce, and government are facing," Ben Knieff, a senior research analyst at Aite Group. "The old cartoon says 'no one on the internet knows you’re a dog' and that is largely still the case."
Some national governments, notably Estonia and India have been working to tackle this challenge with varying results.
The Estonia ID is used to enable ID for documentation and other government and corporate services. India's ID is relies on a national registry of fingerprint and iris scans. Both ID programs include cards and mobile photos and are primarily designed to ensure government payouts are sent to the proper source. In Thailand, a national ID system is seen as a catalyst for mobile payments, tying mobile photo ID to a P-to-P service similar to Zelle (clearXchange).
Mobile's advancement is a driving factor in the future uptake of digital identity, Knieff said. "I don’t think in the near future we will see ‘official’ government IDs on mobile, but it is certainly a reality for things for like proof of insurance. It will expand, but it will take time," Kneiff said.
There are some holdups for digital ID, according to Al Pascual, senior vice president and research director and head of fraud and security at Javelin Strategy & Research, with state governments being a particular hurdle.
"Few are actively pursuing the use of digital IDs in place of physical documents, and even those that are doing so are also placing limitations on their use," Pascual said. "Iowa, for example, will not allow digital IDs to be used when purchasing liquor."