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States to bear digital ID costs without income from Apple Wallet contracts

States to bear digital ID costs without income from Apple Wallet contracts

Digital ID contracts signed between Apple and each of four U.S. states make taxpayers responsible for the costs of maintaining systems for credential issuance, customer support, and promoting the adoption of digital identity technologies to consumers and government agencies, CNBC has discovered through public records requests.

Apple also has “sole discretion” over important elements of the programs, under the contracts with Georgia, Arizona, Kentucky and Oklahoma.

The tech giant’s plans for a digital ID wallet, including integration with the mobile driver’s licenses (mDLs) of eight states, hold the promise of fraud reduction through security mechanisms such as Face ID biometrics.

Fintech consultant and newsletter author Jason Mikula, who found some of the contracts, compares the relationship to that Apple has with its vendors, even though it appears to be the states, as sole providers of the digital ID, who have more leverage.

“I don’t know of any other example where government-owned systems and identity credentials were made available for commercial purposes in this manner,” Mikula told CNBC.

States are required to feature the program with Apple on “all public-facing communications relating to Digital Identity Credentials,” and submit these materials to the company for approval.

The contracts also stipulate compliance of the credentials with ISO mDL standards.

A representative of Arizona’s Department of Transportation says the state will not receive remuneration from Apple.

The accuracy and performance of authentication, with Apple’s native device biometrics or other factors, is the sole responsibility of the states, according to the contracts, which do not include limitations on how Apple can use the capabilities, such as interoperability requirements.

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