Shopping the future: the role of authentication and trust in mobile commerce
Head of Product
BDO, the global business advisory firm, has just published a new ebook looking at ecommerce trends and drivers in a post-pandemic world. tru.ID CEO, Paul McGuire was asked to provide some insights on the importance of digital identity and user authentication in this new mobile-first world.
Shopping the Future: New Horizons in eCommerce, the new ebook from the Tech & Media Division of BDO UK, examines the trends and technologies currently animating the world of ecommerce, with a focus on market disruption and investment potential.
Along with insights from Soleberry Advisory’s founder and director Gabrielle Hase and Foresight’s senior investment manager John Cordrey, the ebook also features tru.ID CEO and co-founder, Paul McGuire, on the key role of mobile identity and trust in the future of ecommerce. Here’s a flavour of what Paul had to say:
‘The future of ecommerce is mobile commerce, and it’s already here,’ he says. ‘More than 55% of online transactions in Europe already take place on mobile, and it’s over 80% in parts of the world like China. But at the same time, over 70% of fraud transactions start on mobile, because hackers have figured out that mobile is not well-protected. Shoppers are increasingly moving to mobile, so there’s been this dilemma, until now – businesses and app developers have had to make an uneasy trade-off between UX (user experience) and security.
Negotiating the eCommerce obstacle course
‘In the past, most merchants have chosen security, and payment industry regulators have recently increased that focus with the introduction of Strong Customer Authentication requirements. As a result, we have all become accustomed to a user experience that is the equivalent of being asked to climb a 12-foot high fence with barbed wire on top, just in order to log in and make a purchase.
‘Consequently, a lot of ecommerce innovations in the last 20 years have been all about skipping over the payment step – one-click buy, storing your payment method or a default address, try before you buy and we'll charge you 30 days later. These are powerful innovations. What's the most amazing thing about Uber? It's not actually getting the taxi; it's getting out at the other end without having to pay the driver. That whole problem of finding the money, the embarrassment of should I tip or not... it’s all gone. That's because Uber has taken away a part of the process that everyone thought was fundamental, but actually isn't. Online should be much more like that: you should be able to go in, do your shopping, and walk out again, because no one wants to pay. Paying is always the pain.’
But checkout and payment is only one part of the friction, says Paul. The other big challenge for users is identifying themselves online, often using email + password and then SMS PIN code – effectively another ‘12-foot high wall’ put in their way. And on mobile it’s much worse.
‘At the moment, people like Amazon are innovating by taking friction out, but the only way they can do that is by taking on the risk,’ he says. ‘You can’t have low friction unless you have high risk. Right now, Amazon is being brave and taking all the hits on the risk side. They'll let the bad guys through. They'll pay, but they're making it great for the good guys. But what we're saying is actually there's a third way, which is you can have your cake and eat it. You can have low friction and low risk if you use the mobile phone.’
Not having to face a challenge about your identity could be one the most fundamental changes in reducing friction online. Ultimately, tru.ID aims to enable everyone to use their mobile phone to create a ‘trust framework’ with a secure, private, digital identity, so enabling them to streamline all their online interactions and avoid the need to type passwords and long credit card numbers or wait for an SMS PIN code.
Building a trust framework
‘You can’t transact without trust, and I think ecommerce can be radically transformed if you build a seamless trust framework. Both authentication and checkout rely on trust. If you can have a seamless way of being a trusted person who's transacting, then you can have a personalised experience going in, and you don't have to go through the payment process, because the merchant knows it's you and you're good for the money. That’s how it should be. There are elements of that around, but there is no seamless experience yet.’
Essentially, in the tru.ID model, your phone itself becomes your identity. ‘As commerce moves to mobile, I think there's a huge potential for commerce to become friendlier, easier, more personalised, more secure, and avoid some of the privacy issues that have been there in the past. It doesn't work like that today, because everyone is still in the old-world paradigm of “I've got to go through hoops of proving who I am with my password, or an SMS, or my credit card out”. But a credit card, after all, is just a proof of identity.’
The trust framework has to rely on some form of fair identity evaluation, so an e-tailer knows that someone is who they say they are. But that doesn’t need to be a real-world identity – it could be a digital identity, with its own identifiers, that everybody can use with confidence and every app developer can integrate with ease.
‘We believe it is possible to transact safely online and get a personalised experience without having to jump through security hoops or share private data, just using the secure SIM card in your mobile phone,’ says Paul. ‘That creates an anonymous digital identity, which says you are trusted, without actually revealing any personal information. It’s a secure, frictionless, private experience – the way mobile commerce should work in the 21st century.
To find out more, you can read the full ebook for free here: Shopping the Future – New Horizons in eCommerce