Mastercard tests identity verification for online payments in Europe

Mastercard is launching a pilot program in Europe to test a digital identity verification service designed to secure and simplify online transactions. Based on EMVCo standards, this service should enable card issuers to verify sensitive information in real time, improving the fluidity of online purchases.

FACTS

• Mastercard has announced the launch of a pilot program for identity verification in online transactions.

• It will initially be deployed in a number of European markets, with the aim of testing a new digital identity verification service designed to simplify and secure online transactions, while avoiding the need to download identity documents.

• Specifically, the service enables real-time verification of sensitive information such as age, date of birth and address:

  • During an online purchase transaction, certain products or services may require a minimum legal age. The merchant then requests confirmation from the buyer.

  • At the same time, Mastercard enables the merchant to carry out an age verification with the issuer, without this altering the customer's purchasing experience.

  • Verification is carried out directly via Mastercard's systems, limiting data exchanges and therefore the risk of propagation.

• The scheme explains that the service is based on the new EMVCo standards, making it not only interoperable, but also up to the security standards expected today, which should facilitate its adoption by financial institutions in Europe

• If the pilot program is successful, Mastercard plans to roll out the service in other markets during 2025.

CHALLENGES

• A solution in tune with the times: Mastercard's service meets the two main criteria currently sought in payment solutions: security and user experience. Firstly, it eliminates the need to download identity documents when making online purchases, thus reducing the risk of fraud. Secondly, the rapid verification of information improves the fluidity of transactions. This meets a growing demand for simpler, less intrusive payment processes, which could be of interest to a large number of customers when shopping online.

• Standardization and adoption of international standards: By adopting EMVCo standards, Mastercard is encouraging the harmonization of identity verification practices on an international scale. This could encourage other financial institutions to adopt similar solutions, fostering a global move towards more unified and secure digital identity management. The American scheme also plans to work in cooperation with governments and businesses on the subject of identity verification. It is counting on this synergy between players to develop the product on a large scale and ensure digital security.

• A strong argument in favor of the card: If Mastercard succeeds in developing its product, it would be an important argument in favor of the use of bankcards. When paying online, users will tend to prefer a fast payment experience, while at the same time ensuring identity verification for the purchase of regulated products and services.

MARKET PERSPECTIVE

• Mastercard is not the first to envisage a large-scale digital identity system for use by governments and financial institutions in payments. The European Union is currently working on the EU Digital Identity Wallet, a project that includes payment among the use cases identified by the consortia.

• Mastercard's solution could overshadow this European project by providing a security standard widely adopted in the payment sector. While it would not replace a fully-fledged identity wallet, it could reduce its usefulness and thus slow down its adoption by the general public.