The use of digital wallets is expanding. Beyond inputting or storing banking information, 80% of Gen Z in the US have digital wallets, primarily regarding payment options. This represents a significant increase in comparison to 2020, where only 29% of iPhone users tried Apple Pay at least once.
An article written by Brian X. Chen and Yiwen Lu on the New York Times delves into the population’s preferences, the practicality of digital wallets, and the increase in electronic transactions.
For this article, we highlight one of the findings from an experiment the authors ran: digital driver’s licenses were not accepted for age verification at bars or buying alcohol. This impediment in the use of digital identification documents was also reflected in many public procedures that still require citizens to carry a physical ID, concluding that a digital ID is still not a complete substitute for a physical one.
The more customers will try to adapt to digital documentation, we’ll see more on the field the problem on accreditation, security and acceptance of Digital IDs many digital governments and companies keep working on. Veridos, a German company focused on partnership with governments to issue ID solutions, has been building a portfolio of digital credentials for international traveling.
Similar to the use of digital IDs, at their speech at the 2023 ICAI Trip Symposium, they found that the expansion of seamless experiences with e-technology (such as faster payment, less bulk, and more organization of personal information) depended on over the authorization and support from the governmental institutions and surveillance organizations that are already charged with the accreditation of physical documentation like passports, IDs, certificates and any other forms.
The deployment of these digital certifications is still relatively new. However, even for older fields such as electronic payments, the increase of its use due to online purchases and transactions will require banks to ensure fraud prevention and scams despite the increasingly high demand.
Overall, the banking industry is well-prepared for these issues. However, they’ll require to expand their current digital operations to ensure customer protection faster than ever, leaving room for possible weak spots as they stretch their current supporting tech structure.
Awareness of these threats will be highly crucial for customers. Especially when financial information is stored beyond the bank’s protection. Financial information, unlike other data leaks, are mostly disclosed from targeted hacking operations and second parties or third parties storing credit card information are more commonly to be subject of these operations.
Countries such as the US, which is one of the leading countries of the use of electronic payments, especially among youth, has turned as one of the main objectives of China’s cyberattacking groups.
Analyzing the specific case of China’s leading readiness in cyber matters, cybersecurity seems to be linked to acceptance and quick development of the use of digital documentations. Usually, with Chinese Techs expanding their services quickly.
From its government support in COVID-19 for a rapid digitalization, to cash being less common even for small transactions like tipping street performers, Chinese techs are progressing rapidly outside the country. According to the World Bank’s Global Findex Database 2021 report, 82% of Chinese adults made a digital merchant payment in the same year, which is more than double the global average and quantifies China as a world leader in digitalization.
It must be noted that this trend is not constant across the region. Whilst digital payments have increased in ASEAN countries after e-commerce introduction, Shopee, its leading e-commerce platform, still struggles with the region’s ingrained preference for “cash on delivery”. Furthermore, 73% of ASEAN population lack a bank account, isolating a great portion of ASEAN from protection against fraudulent transactions.
We come to a conclusion that to reduce risks at the increasing digitalization trends, there must be balance between accreditation support, security awareness and planning, and acceptance.
These three pillars will serve as a tool to build a solid base for both private tech providers and regulators. A secure and inclusive digital future requires a balanced approach – fostering innovation while prioritizing security and building trust through widespread acceptance.
Written by Emily Ulloa
