World Bank backs digital wallets as foundation for user-centric digital identity

A policy note published by the World Bank within the framework of the Identification for Development (ID4D) initiative has argued strongly for digital wallets and verifiable credentials (VCs). It states that countries building digital public infrastructure (DPI) must accelerate the move away from monolithic and siloed systems where identity, data sharing, and payments are handled by separate rigid platforms, toward a modular, user-centric and standards-based architecture.

Titled Digital Wallets: A New Paradigm, the 70-page publication acknowledges that such shift is already happening, although at a slow pace, with the growing emergence of digital wallets and VCs as a modern and user-centric approach to digital identification.

These systems, per the publication, are a shift away from centralized data systems toward decentralized architecture where individuals can securely store and control their own digital proofs.

Several executives of digital ID firms made the case for this shift to a decentralized digital ID and PPP models in one panel during the ID4Africa AGM in Abidjan in May. One of the panelists was the Co-founder and Chairman of Tech5 which has been involved, alongside Visa, in wallet projects in Ethiopia, Djibouti, Honduras, and Papua New Guinea. Other countries like Benin and Morocco are also working on digital ID wallet projects as part of their efforts to expand and simplify access to digital ID.

According to the policy note, wallets are a sort of convergence point of trust where digital identity, payments, or electronic signatures are no longer separate silos, but a single and interoperable platform that enables seamless and privacy-preserving transactions.

It explains that the advantages of this infrastructure change are manifold. For governments, it reduces the burden of managing massive centralized databases while for citizens, it means data sovereignty which is the ability to prove who they are or what they are eligible for without having to reveal too much personal information.

The note, which was released alongside a digital wallets explainer publication, insists that digital ID user-centricity is not just a feature, but an architectural necessity because beyond the value-added aspect of selective disclosure, it also facilities interoperability which means it can be used across different services and even borders.

For countries to advance in this direction, the policy note suggests a roadmap which they can follow. One of the recommendations is the adoption of open standards such as W3C Verifiable Credentials to ensure interoperability across borders and sectors, and make sure to anchor the ecosystem around high-value needs like social benefits eligibility (G2P payments) such as the case with MOSIP’s Inji wallet, student credentials like Kenya is planning, or business licenses.

The note also urges nations to clearly define the roles and responsibilities of different actors and distinguish between credential issuers, wallet providers, and verifiers, while they must also make sure they invest in inclusive design, ensuring that those without smartphones or digital skills are not left behind in the transition to a wallet-based economy.

The policy note serves as a conceptual foundation for policymakers and urges them to view wallets not as a standalone product, but as a piece of critical infrastructure which must be developed.

Article Topics

biometrics  |  digital ID infrastructure  |  digital public infrastructure  |  digital wallets  |  Identification for Development (ID4D)  |  World Bank