Visa Report: Digital ID Could Transform Payments
The integration of digital identity systems with payment networks could reshape global financial services and government interactions, according to research from Visa, which outlines how digital ID adoption could accelerate through everyday payment transactions.
The 2025 white paper from Visa Government Solutions reveals that 850 million people globally lack official identification, with an even larger number lacking digital identification credentials that would enable secure online transactions and service access.
The World Bank's ID4D initiative has backed the development of these systems, viewing them as crucial for accessing financial services and healthcare.
Building Trust Through Payments
The report suggests that payment transactions could drive the adoption of digital identity systems by offering users immediate value.
Digital payments company Visa argues that since payments are part of daily life and already involve authentication, they provide natural opportunities for users to become comfortable with digital identity verification.
McKinsey Global Institute research suggests implementing digital identity frameworks could generate economic value equivalent to 3-13% of GDP in some countries by 2030.
The research indicates that while developing economies could see average benefits of 6% of GDP, mature economies could still achieve gains averaging 3%.
The COVID-19 pandemic has increased these potential benefits. McKinsey found that "the potential economic gain from building robust digital financial infrastructure is about 20 percent greater now than it was before the pandemic," highlighting the importance of digital systems for distributing benefits to individuals and businesses.
Technical Standards and Implementation
Several countries have already implemented digital identity systems with varying approaches. Ukraine's Diia system, launched in 2020, allows citizens to store official documents like passports and driving licences on smartphones, with these digital versions having the same legal status as physical documents.
Belgium's itsme app, introduced in 2017, demonstrates public-private partnership in digital identity.
The system enables users to prove their identity, sign documents and log into various services using smartphones, supporting both government services and private sector applications like banking and insurance.
Visa is working to integrate biometric authentication into payment systems through its Payment Passkeys service.
This technology links payment credentials to specific devices, allowing users to authenticate payments using the same biometric data they use to unlock their phones.
Security and Privacy Challenges The report outlines significant challenges around biometric data security and privacy. For large-scale identification systems comparing one person against many others (known as 1-to-N matching), solutions typically require centralised storage of biometric templates - mathematical representations of physical characteristics.
Accuracy presents obstacles at scale. While current biometric technology performs well with smaller groups, scaling to millions of users increases the risk of false matches.
A 1% false positive rate in a database of one million people would result in 10,000 incorrect identifications.
The development of AI has implications for biometric systems.
The report notes that technology available to fraudsters is evolving rapidly, with evidence that some have defeated liveness detection systems - tools designed to ensure biometric data comes from a real person present at the time of verification.
Industry Collaboration
Visa has joined several industry bodies working on digital identity standards.
It holds a board position at the FIDO Alliance, which develops passwordless authentication standards, and chairs the Linux Foundation's OpenWallet Foundation, which creates open-source digital wallet components.
The company is also working with the European Union on its eIDAS 2.0 regulation, which requires member states to issue digital identity wallets to citizens by the end of 2026.
These wallets must meet high assurance levels for services like bank account opening and healthcare access.
The OpenWallet Foundation is focusing on developing code components to enable the EU Digital Identity wallet.
This approach aims to support diverse wallet applications while maintaining secure, interoperable infrastructure.
“Trust is built with high-quality user experiences, strong consent frameworks, and an expectation that digital identities and the associated data are protected at the highest security level,” the report states, emphasising the importance of public-private collaboration in digital identity implementation.
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