A new white paper published by the World Bank argues it doesn’t have to be this way.
In most countries, digital ID plays only a bit part in the payments story. You show your credentials to open an account, and then identity largely disappears, leaving transactions to rely on account numbers, aliases, and phone numbers that offer little way to verify who is actually on the other end. The result is a persistent vulnerability to fraud.
The paper, titled ID Meets Instant, lays out a conceptual model for integrating digital ID into fast payment systems through a portable Payments Identity Credential. It leverages verifiable credentials (VCs) and is built on a trust framework established among national ID authorities and fast payment systems.
“The Payments Identity Credential can be understood as a portable digital portfolio for financial services – functionally similar to a card credential, but designed for open, account-based systems and capable of operating across multiple providers and providing access to various services and functionalities,” the authors, Guillermo Galicia Rabadan and Harish Natarajan, explain in a World Bank blog post.
The Payments Identity Credential could bundle credentials from multiple banks and payment providers into a single, reusable package that works across the entire ecosystem, they add.
Rather than waiting days to open a bank account, consumers could be onboarded in minutes. Instead of relying on passwords or SMS codes, authentication could be based on cryptographically secure credentials. And when sending money to a merchant or individual, users could verify the recipient’s identity before authorizing the transfer, reducing impersonation fraud.
“By carrying a KYC verifiable credential anchored in authoritative digital ID systems, the Payments Identity Credential supports instant onboarding across providers and reduces the risk of mule accounts and synthetic identities that exploit fragmented onboarding practices,” says the white paper.
The credential would also enable consent-based data sharing, allowing users to selectively share payment history to access credit or insurance without handing over raw financial data. Controlled delegation, letting businesses or automated agents act on behalf of users under clearly defined rules, is another capability the framework would support.
Delivery wouldn’t be limited to smartphone wallets. The paper envisions the credential operating across QR codes, payment apps, and single-use tokens, making it viable even in low-connectivity environments.
Some countries are already integrating digital identity and payment wallets, including Indonesia’s Digital Population Identity (IKD) and Singapore’s Singpass. The European Digital Identity (EUDI) Wallet is also exploring how to integrate with existing payment ecosystems and deliver new payment services.
However, the three pillars of modern digital public infrastructure (DPI) – digital ID, fast payments, and trusted data exchange – have historically evolved in parallel rather than as an integrated system. Existing implementations linking digital ID and payments remain narrowly focused on onboarding, according to the authors.
Scaling the model requires resolving hard questions around consumer protection, data privacy, liability, and institutional coordination. Getting the governance right, the paper notes, will be just as important as the technology.
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