Invisible commerce and user trust in digital wallets

Your digital ID wallet will soon become ‘RegTech’, and treated like a credit card. Why? When you pay with a credit card over the phone - ‘Card Not Present’ transactions - the business can’t physically see you. There’s a higher chance that it’s fraud, and more likely the customer disputes the payment. So the payment companies charge *more* for those remote transactions. But when you are physically in the store, the payment is called ‘Card Present’. Less likely to be fraud, and so they charge a *lower* fee. What has this got to do with Digital ID wallets? Because we can begin to handle digital wallet transactions differently, if we know the customer is present or not. Let me explain. Soon, customers will be able to securely connect their digital ID wallet to their account. It will become a companion app to that service. First, the digital wallet will be used to share personal data with the company. But once the customer has that private, secure connection to their account, the wallet will be used to check for fraud. For example, if a business wants to check that a customer is involved in a transaction, they can just ping the customer’s digital wallet. “Are you interacting with us just now?” Assuming we do the right checks on the wallet side, like asking for a selfie biometric, then the customer MUST have approved the transaction. So just like credit cards, we will end up with two types of customer transaction: 1. Customer Wallet Present 2. Customer Wallet NOT Present And as with payments, the wallet-less transactions will be exposed to *much* more fraud, and will cost the business more. The best bit? Digital wallets will crowd out the fraudsters. Yes, bad actors will have their own fake wallets and fake AI agents and all the rest. But they won’t have *Customer Wallet Present* Meaning fraudsters will be forced to move over to less trusted channels, like SMS and email. …making the connected digital wallet *even more* valuable to the business. ‘Verified customer connections’ are why I’m bullish on digital ID wallets. Not just because I can easily share my ID and other personal data. But because I can also use it *across all* my customer relationships, and in any channel. Online. In branch On the phone. And with my AI Agent. Yes, we’ll need to make sure that the right person is approving transactions on the digital wallet. But with biometrics stored (and kept) on the device, it’s a damn sight easier than checking it’s the right person accessing your account woth a password. The takeaway: Your digital wallet just became your first line of defence. And your digital wallet just became ‘RegTech’. And if my bank - or any company for that matter - doesn’t accept my wallet as a new, trusted channel, then me and my AI agent are going to take my business elsewhere. Digital wallets won’t just help fight fraud. They’re going to become a competitive advantage. More in this week #CustomerFutures newsletter. Link below.

Businesses struggle with fragmented customer data. Across different departments or systems, customer records are often incomplete or duplicated. But what if the customer was the master data record? In our recent live podcast with Jamie Smith💡, he presented how digital ID wallets can transform customer engagement by shifting control of verified data to the individual. Jamie's thesis is that through the use of digital wallets, businesses can start treating the customer as the master data record. With a digital wallet, customers store their digital verifiable credentials, including identity documents and account preferences. And businesses can request that verified information when needed, directly from the customer's wallet, thereby reducing operational complexity, improving trust, and creating frictionless digital experiences. Here's how: 1) Faster onboarding and higher conversion rates: Instead of requiring customers to repeatedly enter personal details and submit ID documents, businesses can request pre-verified data from their digital wallet in a single step. 2) Fraud prevention and risk reduction: Businesses can authenticate customers instantly without relying on insecure, stored identity data. 3) Creating a new revenue opportunity in the form of a verified data exchange: This model enables businesses to act as credential issuers rather than data warehouses. For example, a financial institution (FI) could issue a verified creditworthiness credential, allowing a customer to share a trusted record with a lender instead of submitting sensitive documents manually. The FI could then charge for making that verified data available for verification. 4) Personalization without privacy risks: Instead of businesses storing and analyzing vast amounts of customer data, individuals can store and share their verified preferences directly from their digital wallet. Because businesses receive information directly from customers in real-time, they can offer personalization without relying on invasive tracking methods. I believe that businesses that continue relying on outdated customer databases and traditional authentication methods will face growing challenges, including higher fraud risks, increased regulatory pressures, and declining customer trust. Those that embrace digital ID wallets now will gain a competitive advantage in a more secure, privacy-first digital economy.

Trust Is the New Currency in Digital Wallets As US fintechs chase scale, digital wallets face a crossroads familiar to players in India, Brazil, and Kenya: adoption without TRUST is a leaky bucket ! This playbook from Consumer Reports offers a framework to fix the hole. 📍 Focus U.S with global echoes 👇 Key takeaways from the report, along with my own thoughts: •💡 Trust gap is real: only 37% of Americans trust fintechs vs. 65% for banks. Echoes India’s early UPI days- scale surged, but consumer faith lagged. •📈 Spending blindness is widespread: 67% of users lose track of spending. Much like Brazil’s Pix surge, real-time convenience outpaced controls. •🔍 Onboarding ≠ fine print dump: clear, visual disclosures on costs and data use are now a competitive differentiator—see M-Pesa’s simplicity playbook. •🔒 Safety is a selling point: 52% of U.S. consumers want fraud protections -yet most don’t know if they’re covered. A wake-up call for wallet providers. •🧠 Build for financial wellbeing: tools to track, project, and alert spending aren’t just features - they’re trust builders in disguise. Much like global wallet leaders learned, trust isn’t won through features alone. It’s built through frictionless clarity and consumer-first design. 📣 Are you building for scale or for trust (or both )? Credits and references : Consumer Reports, Forbes, Morning Consult, Banking Dive #DigitalWallets #FintechTrust #GlobalFintech #UserCentricDesign #FinancialInclusion