What will remain constant – whether we have a one-dimensional or multidimensional perspective of privacy – is the need to securely conduct transactions at scale; the need of a single-sign-on credential that can generate a multitude of tokens depending on the personalized transaction ecosystem, seamlessly traversing closed-loop and open-loop environments.
A token takes life on issuance, it is sustained through settlement and it dies on breach. Most of us who seek the real meaning of life eventually end up trying to understand death. Similarly, one could argue that the recent spate of breaches has pushed us towards expediting the rollout of a system where a token is killed with every transaction. Ironically, we call this system tokenization. Assuming tokenization now becomes the underlying driver for all transactions, a token’s sustenance has morphed into its death. Effectively, it is all about issuance and settlement.
From buyers to sellers, from credentials to tokens, and from identity to privacy, the foundation of any transaction system boils down to issuance and settlement. In this flat socially networked omnicommerce world, this system of issuance and settlement becomes the most important component of the infrastructure of the infrastructure.
Similar to buyers and sellers, issuance and settlement are also two sides of the same coin. Effectively, the system in place for issuance is closely linked to the system in place for settlement. The factors that will drive participation in the value-chain of issuance will also drive the participation in the value-chain of settlement. The factors that will drive the business model of issuance will also drive the business model of settlement. The factors that will drive the scalability of the issuance system will also drive the scalability of the settlement system.
Clearly, the nature of a token determines the kind of issuance and settlement system required. Effectively, the systems in place for issuing and settling cash, or credit cards, or health cards, or insurance cards, or driver’s license, or passports, are very different and distinct from each other – at least today.
When it comes to issuance and settlement, most efforts to date have been related to payments. Largely absent are meaningful and scalable systems of issuance and settlement for other kinds of non-payment transactions – underscore “meaningful and scalable.”
Most countries, especially where healthcare is a state-backed public service, have special purpose health cards that cater to accessing providers and services. The driver’s license system is fairly robust but is not globally interoperable. The passport system is globally interoperable but does not necessarily scale to other services.
In most instances, we look at some form of identity, such as the social security number in the US, which permeates across industries as a source of identity but falls short of seamlessly creating tokens that in turn facilitate various payment and non-payment transactions across a common settlement network.
There are several enabling components that are required across all personalized transactions, whether they are for finance, retail, health, education or government. These components include the ability to aggregate disparate domains, to transact over all channels and all devices, to support transactions initiated by users as well as their designated IoT devices, to secure communications and data, to leverage data and the related analytics, to manage identity and privacy, to issue various tokens and settle these tokens in a closed loop or open loop environment.
These components effectively form a common and (hopefully) standardized utility, upon which various diverse and customizable usability scenarios can then be built. While the usability scenarios or applications could be sectoral or regional in nature, and could eventually be customized per consumer and per citizen, this utility is the infrastructure of the infrastructure, or as we would like to call it, the ePlumbing.
Check out Mehul Desai’s August of Money.