Sep 18, 2017

The Growing Role of Digital Identity in eCommerce


As customers increasingly turn online for choice and convenience, Internet Retailers are under pressure to implement secure digital identification services in order to deliver optimized shopping experiences across multiple touchpoints and on different channels.

Likewise, while immediate ‘always-on’ services attract customers, concerns regarding privacy, data breaches, fraud, and identity fraud also need attention.

Identity, or rather the lack of identity, is at the root of these problems.

Digital Identity provides a cost-effective framework to validate, verify, and authenticate online customer identities. It provides the necessary proof-of-identity services to enable the shift towards eCommerce, reduce fraud, and give supply chain members the confidence to invest in digital platforms.

What is a Digital Identity?

The International Organization for Standardization (ISO) define a digital identity as any “item inside or outside an information and communication technology system, such as a person, an organization, a device, a subsystem, or a group of such items that has recognizably distinct existence.” In short, digital identity is a set of attributes associated with a person.

What’s Driving the Need for Digital Identities?

Digital transformation.
Cost controls, process improvement, and customer expectations are accelerating the digital transformation of services. Underpinning this are services to orchestrate digital identity-related tasks.

Consider the difference between your real world and virtual world identities.

In the ‘real’ world, you use different identities — national ID cards, office swipe cards, driver’s licenses, credit cards, medical cards and more — to access services.

For example, your driver’s license doesn’t know how many frequent flier miles you’ve gathered in the last twelve months. In general, these identities don’t share data. And for data privacy reasons, there may be legitimate reasons to protect this data.

But what if you wanted a unified view of transactions performed on these cards or online?

That’s where digital identity comes in. It coordinates verification, authentication, and authorization.

In the ‘virtual’ world, you need a digital identity to access online resources online.

Of course, most of us have informal online identities, typically based on email accounts, browsing habits, shopping, and social media interactions.

While some of these require verification —for example, your Google account requires email or text verification — this is not sufficient to access secure resources, especially when financial transactions are involved.

For companies that offer digital services online, identity poses a unique set of substantiation.

It helps confirm that a potential customer is the ‘person’ they claim to be. Government agencies or educational institutions can know that payments are going to the right person.

Once verified, you can track this identity as it moves across sites, channels, touch points, or even devices.

Examples Where Digital Identity Is Required

There are challenges for those who want to develop a better understanding of their customers — and to use this understanding to develop and offer the appropriate set of products and services.

Without a digital identity, it’s difficult to match a customer with specific transactions — at least on the level they need to deliver personalized ‘just in time’ experiences as customers move across different channels. Digital Identity gives Internet Retailers and Government agencies the insight to make these connections and drive increased revenues across channels. It allows retailers to strengthen their relationship with customers and introduce new experiences that encourage further engagement and uptake.

In the same sense, Digital Identity gives a higher level or protection against fraud and data breaches.  By having a higher level of verification needed; the consumer, the agency and the retailer all have better assurance that the transactions are authentic and handled in a safe and secure manner.

Examples of identity-related tasks that need a higher level of identification include:

The Isle of Man Post Office is already exploring options to augment its physical MiCard with a digital identity token to provide customer choice as to how they choose to assert their identity to access services: face-to-face or ‘not in person’, available by phone or online.

The Post Office Role In Providing Digital Identity Services

The USPS OIG white paper, Digital Identity: Opportunities for the Postal Service describes gaps in today’s eCommerce marketplace, the need for stronger identity authentication procedures, and measures for customer privacy protection.

In the same way as the Dept. of Transport provide a Driver’s License, a Digital Identity Provider is required to create and authenticate digital identities.

By leveraging their reputation for trustworthiness, national address system and physical network, Postal Operators are in a strong position to verify the link between customers and their digital identities.

In terms of revenue generation, Postal Operators, acting as Digital Identity Providers, can charge service fees for digital identity services, such as per-transaction fees or subscription access fees.

It suggests that Posts could provide the following to resolve these issues:

How Digital Identity Benefits Internet Merchants

To improve engagement and conversion rates, Internet Retailers need better customer profiles. Digital Identity helps map customer behavior across different channels, use analytics to refine their customer journeys, and predict buying habits based on historical patterns. It also allows them to deliver tailored content, special offers, recommendations, and rewards based on loyalty schemes.

Additional benefits include:


For Posts, the window of opportunity to claim a stake-hold in digital identity is closing fast.

Although a common set of standards and protocols have yet to be agreed, technology companies and internet retailers are actively exploring this area.

To take full advantage of the opportunities offered by eCommerce, Posts can help shape the future of identity and extend the Universal Service Obligation by providing citizens with a secure and trusted channel for online communications and commerce.