U.K.-based Nuggets is integrating its blockchain technology to existing payment rails, creating a system for merchandise will no longer have to access or store consumers' personal data. It puts an end to the password authentication or the need for personal information with third parties.
Lateral Payment Solutions, which has processed millions of e-commerce B2B and B2C transactions for merchants since 2001 and plans to connect its payment gateway and merchant digital identity into the Nuggets blockchain.
"We're seeing with a major merchant processors," said Julie Conroy, research director and fraud expert with the Boston-based Aite Group. "Obviously, anything that can be taken out of the merchant's environment is good news, given the fact that most merchants need to view a possible data breach as a matter of 'when,' not 'if.'"
With the Nuggets setup, the merchants will not need a username and password to connect to the payment provider.
"When the consumer logs on the Internet," said Alastair Johnson, CEO and Founder of Nuggets. "The online shopping website is accessed after the authentication is passed, and in this way the personal sensitive data is not stored on the merchant server."
The concept of a digital ID has come up with a lot of questions about how a universal digital ID could work.
Still, the idea of digital IDs is starting to take hold in various forms, said Zil Bareisis, a London-based senior analyst for research firm Celent.
Bareisis said. "Instead of supplying all of your details, you have to refer to your identity provider.
Some identity schemes are mandated and built by governments, such as in India, and others are coming from bank consortiums such as BankID in Norway; or from individual third parties like Verify in the U.K.
But Nuggets represents a different type of solution because it promises to put people into charge and let them decide how much is needed.
Notification that the delivery of reliable digital IDs has been inconsistent, Mastercard and Microsoft disclosed to partnerships.
Mostly, digital ID platform developers have the goal of eliminating passwords and the friction they cause in payments and the gaps they leave open for hackers. To pursue that goal, most have been seeking partnerships with payments networks or processors.
U.K.'s Nuggets certainly falls into that category, anticipating the effects of the Secure Customer Authentication requirement of the PSD2 taking hold in September 2019. It will increase the demand for biometric ID technology and increase the flow of online transactions requiring two-factor authentication.
"Funded Decentralized Digital Identities", especially payments, where the initial focus for merchants, "Nuggets" Johnson said.
The digital ID may be for consumers through apps and devices like phones, watches and smart rings, Johnson added. "As more devices become connected this year, being able to accommodate mobile payments via those devices will be driven by digital identity."
Nuggets and Lateral Payment Solutions will try to overcome any roadblocks in trying to achieve scales.
"The big question mark here is how many people will care enough to actively participate?" Aite's Conroy asked. "Consumers have to sign up with Nuggets, and right now it's just a group of consumers who are security conscious enough to actively change their behavior patterns and sign up for a digital ID service."
Views of the Nuggets scheme as a great example of the potential of blockchain. "She said." But the actual production numbers will be low to the consumer dependency.
Businesses will create an interest in fraud and chargebacks, Johnson said.
"With Nuggets, businesses reduce data storage and mitigate data breaches," Johnson added. "With recent data breaches, more retailers and services will provide that the existing model of information is broken and not sustainable."