Fast payments and digital ID: Making everyday payments safer, simpler, and more efficient

Imagine this situation – María runs a small grocery shop, and one afternoon she receives a message asking her to pay a supplier urgently through the country’s fast payment system. The name looks familiar. The payment request looks real. She sends the money. Minutes later, she realizes it was a scam. The money is gone.

Fast payment systems are incredibly powerful. They move money instantly, around the clock, at low cost. But speed also removes the margin for error. Once funds move, they are hard to recover. And today, many fast payment systems still rely on fragmented identity checks and app-specific controls that leave users exposed to fraud, misdirected payments, and unnecessary friction.  This is where digital identity can fundamentally change the experience.

Beyond individual safety and convenience, the integration of fast payments and digital identity also helps create jobs and improve people’s lives. By reducing payment frictions, fraud risk, and onboarding barriers, these systems help small firms operate formally, get paid reliably, and scale their activities, while enabling workers and microentrepreneurs to participate more fully in the digital economy. In this way, trusted digital payments infrastructure directly supports job creation, productivity, and resilience.
 

Using Digital ID to Improve the Fast Payments Experience

In most countries, digital ID is used mainly at onboarding. You show your ID, open an account, and then identity disappears from the payment journey. Payments themselves rely on aliases, account numbers, or phone numbers, with limited ability for users to verify who they are really paying.

What if identity stayed with the transaction? In María’s case, the payment request could have carried a verifiable proof of the supplier’s identity, issued by a trusted authority and recognized across the payment ecosystem. Before sending the money, María’s phone could have shown: Verified merchant. Registered business. Credential issued by the national ID framework. If the identity did not match, the payment would trigger a clear warning.

This is not about adding new steps or slowing payments. It is about making trust portable and reusable, so that users can confirm who they are dealing with instantly, without friction.

The same approach improves other moments that matter: opening a new account in minutes instead of days, authenticating securely without juggling passwords or SMS codes, and sharing payment history safely to access credit or insurance without exposing raw data.
 

What It Takes to Make This Work

Importantly, this does not require new payment rails or a single national wallet. The approach explored in ID Meets Instant builds on existing fast payment systems and digital ID investments by introducing a portable Payments Identity Credential, that leverages verifiable credentials and is built on top of a trust framework established between National ID Authorities and operators and regulators of Fast Payment Systems.

The Payments Identity Credential can be understood as a portable digital portfolio for financial services—functionally similar to a card credential, but designed for open, account-based systems and capable of operating across multiple providers and providing access to various services and functionalities. It can bundle credentials issued by multiple banks and payment service providers into a single, reusable construct, enabling interoperability across the ecosystem while preserving user choice.

By carrying a KYC verifiable credential anchored in authoritative digital ID systems, the Payments Identity Credential supports instant onboarding across providers and reduces the risk of mule accounts and synthetic identities that exploit fragmented onboarding practices. During transactions, a verifiable presentation of the payee’s identity can be embedded in a QR code or request-to-pay message, allowing users to cryptographically validate the identity of a merchant or recipient before authorizing a payment.

The Payments Identity Credential also enables trusted, consent-based data sharing and authentication. Payment transactions and related information can be bundled into verifiable credentials within the Payments Identity Credential and selectively shared to support access to credit, risk assessment, and fraud prevention without exposing raw data. Authentication credentials embedded in the Payments Identity Credential can be reused across providers and channels in a manner analogous to other payment instruments, reducing user friction while strengthening security.

At a practical level, this means three things. First, identity becomes a credential that can travel. Instead of each bank or wallet redoing checks in isolation, trusted credentials can be issued once and reused, with user consent.

Second, verification happens at the moment of payment, not just at onboarding. Payment requests, QR codes, or request-to-pay messages can carry cryptographic proof of who is requesting or receiving funds.

Third, users stay in control. Credentials live in wallets or apps people already use. Only the minimum information needed for a specific transaction is shared, and permissions can be revoked.

Because this model operates as an overlay, countries can adopt it incrementally, starting with high-impact use cases such as confirmation of payee or instant onboarding.
 

Policy and Regulatory Safeguards Matter

Integrating identity more deeply into payments raises legitimate concerns. Who issues credentials? Who can verify them? What happens when something goes wrong? For this reason, the model emphasizes strong policy and regulatory foundations alongside technology.

A shared trust framework is essential, aligning digital ID authorities, payment system operators, and financial regulators. This framework defines how credentials are issued, validated, revoked, and supervised. It also clarifies liability and dispute resolution, which is critical in fast, irreversible payment environments.

Privacy and consumer protection are non-negotiable. Verifiable credentials support data minimization and consent by design. Users do not hand over full identity profiles; they present proofs. Regulators retain oversight, and competition is preserved by ensuring that no single provider controls access to credentials or wallets.

Finally, safeguards must anticipate what comes next. As fraud becomes more sophisticated and AI-driven agents begin to initiate payments on behalf of users, identity-based credentials provide a foundation for controlled delegation, auditability, and trust at scale.
 

Moving from Faster Payments to Better Payments

Fast payment systems have transformed how money moves. The next phase is about how safely, confidently, and inclusively people can use them.

By bringing digital identity into the heart of payment flows, countries can reduce fraud, simplify access, and make everyday transactions feel less risky and more efficient. The opportunity is not to build something entirely new, but to connect what already exists into a system that works better for users like María, every single day.

Source : World Bank