Eftpos testing micropayment, digital ID services

James Eyers

Jul 22, 2020

AFR

Eftpos is expanding beyond routing debit payments, trialling a new micropayments service using a digital representation of the Australia dollar, which could offer media and entertainment companies a way to find new customers.

Eftpos CEO Stephen Benton: Micropayments could be used to buy online content such as pay per page or streaming services on a pay-per-second basis. Supplied

It is also piloting a digital identity solution with Australia Post, in a move that could spur the major banks to become validators of identity in the digital economy, opening up a new revenue stream.

Eftpos, which is owned by banks and major retailers, has entered a partnership with Hedera Hashgraph, a software company part-owned by Google, IBM and a host of other major companies.

Hedera has developed a distributed, public network, on which eftpos will explore hosting a “digital Australian dollar stablecoin”. It will use the cryptocurrency to fund a digital wallet that could be used to make very small amount payments for web content.

Micropayment transactions could be used to buy online content such as pay-per-page articles for a publisher, or streaming services on a pay-per-second basis, eftpos chief executive Stephen Benton said.

Separately, eftpos expects to have its “connectID” service in the market by November, showing its infrastructure can be used to move not only money but proof-of-age and identity data.

This could help merchants establish identity at the point of sale, or government departments to know who they are dealing with when making welfare payments.

The link-up with Australia Post, after the digital ID project was announced earlier this year, will get the banks thinking about the potential of providing “identity-as-a-service” to create new non-interest income as e-commerce is given a boost by the coronavirus pandemic.

The Reserve Bank has been frustrated about the time it has taken for bank-led digital identity services to arrive in the market.

But the banks have been distracted by many other tech projects including open banking. Part of the delay has been the lack of a broker in the market.

Under the Australian Payments Network TrustID framework, eftpos will become a central identity broker, while Australia Post will be identity validator during the trial.

The RBA is keen to create a more solid system for digital ID because it recognises it will help improve cyber security, by limiting the number of “100 point” ID checks done by companies across the economy, which has created a proliferation of credentials and copies of ID documents.

Under the eftpos model, it will be the transporter of ID data but not store it. Australia Post will connect to all relying parties on the network, and identity providers are able to compete to prove themselves as the most trusted protector of the information.

As they enter the new market, banks will be competing with global giants battling for a role in identity verification, including Apple, which offers its two-factor authentication for some subscription services, and payments behemoth Mastercard, which has also been working with Australia Post to pilot new systems.

Mr Benton said eftpos had been working with almost 20 businesses across the country on the connectID proof of concept since early in the year and is now ready to take it to the next level.

The AusPayNet TrustID framework is designed to facilitate an industry approach to the sharing of personally identifiable information, setting out rules and guidelines on the design and build of products and services to ensure interoperability between different services.

Australia Post is also an accredited service provider of “Digital iD” in the government’s Trusted Digital Identity Framework set up by the Digital Transformation Agency for access to government services. But it has been slow to connect with the private sector.

James Eyers writes on banking, fintech and technolo