August 24, 2017

The Growing Role of Digital Identity in eCommerce


As customers increasingly turn online for choice and convenience, Internet Retailers are under pressure to implement secure digital identification services in order to deliver optimized shopping experiences across multiple touchpoints and on different channels.

Likewise, while immediate ‘always-on’ services attract customers, concerns regarding privacy, data breaches, fraud, and identity fraud also need attention.

Identity, or rather the lack of identity, is at the root of these problems.

Digital Identity provides a cost-effective framework to validate, verify, and authenticate online customer identities. It provides the necessary proof-of-identity services to enable the shift towards eCommerce, reduce fraud, and give supply chain members the confidence to invest in digital platforms.

What is a Digital Identity?

The International Organization for Standardization (ISO) define a digital identity as any “item inside or outside an information and communication technology system, such as a person, an organization, a device, a subsystem, or a group of such items that has recognizably distinct existence.” In short, digital identity is a set of attributes associated with a person.

What’s Driving the Need for Digital Identities?

Digital transformation.

Cost controls, process improvement, and customer expectations are accelerating the digital transformation of services. Underpinning this are services to orchestrate digital identity-related tasks.

Consider the difference between your real world and virtual world identities.

In the ‘real’ world, you use different identities — national ID cards, office swipe cards, driver’s licenses, credit cards, medical cards and more — to access services.

For example, your driver’s license doesn’t know how many frequent flier miles you’ve gathered in the last twelve months. In general, these identities don’t share data. And for data privacy reasons, there may be legitimate reasons to protect this data.

But what if you wanted a unified view of transactions performed on these cards or online?

That’s where digital identity comes in. It coordinates verification, authentication, and authorization.

In the ‘virtual’ world, you need a digital identity to access online resources online.

Of course, most of us have informal online identities, typically based on email accounts, browsing habits, shopping, and social media interactions.

While some of these require verification —for example, your Google account requires email or text verification — this is not sufficient to access secure resources, especially when financial transactions are involved.

For companies that offer digital services online, identity poses a unique set of substantiation.

It helps confirm that a potential customer is the ‘person’ they claim to be. Government agencies or educational institutions can know that payments are going to the right person.

Once verified, you can track this identity as it moves across sites, channels, touch points, or even devices.

Examples Where Digital Identity Is Required

There are challenges for those who want to develop a better understanding of their customers — and to use this understanding to develop and offer the appropriate set of products and services.

Without a digital identity, it’s difficult to match a customer with specific transactions — at least on the level they need to deliver personalized ‘just in time’ experiences as customers move across different channels. Digital Identity gives Internet Retailers and Government agencies the insight to make these connections and drive increased revenues across channels. It allows retailers to strengthen their relationship with customers and introduce new experiences that encourage further engagement and uptake.

In the same sense, Digital Identity gives a higher level or protection against fraud and data breaches.  By having a higher level of verification needed; the consumer, the agency and the retailer all have better assurance that the transactions are authentic and handled in a safe and secure manner.

Examples of identity-related tasks that need a higher level of identification include:

  • Accessing government and healthcare account information
  • Performing age-restricted transactions
  • Applying for government and financial services
  • Verifying customers, business partners
  • Managing government services and legal documents
  • Setting up utility and bill pay accounts
  • Paying and renewing licensing fees

The Isle of Man Post Office is already exploring options to augment its physical MiCard with a digital identity token to provide customer choice as to how they choose to assert their identity to access services: face-to-face or ‘not in person’, available by phone or online.

The Post Office Role In Providing Digital Identity Services

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The USPS OIG white paper, Digital Identity: Opportunities for the Postal Service describes gaps in today's eCommerce marketplace, the need for stronger identity authentication procedures, and measures for customer privacy protection.

In the same way as the Dept. of Transport provide a Driver’s License, a Digital Identity Provider is required to create and authenticate digital identities.

By leveraging their reputation for trustworthiness, national address system and physical network, Postal Operators are in a strong position to verify the link between customers and their digital identities.

In terms of revenue generation, Postal Operators, acting as Digital Identity Providers, can charge service fees for digital identity services, such as per-transaction fees or subscription access fees.

It suggests that Posts could provide the following to resolve these issues:

  • In-person authentication — verify an individual’s control over an online identity by matching a physical address and mail, and checking physical identification.
  • Trusted third-party services — serve as a trusted third party in order to verify an individual’s location of residence. In doing so, “customers could choose what to reveal about their real-world identity in a given transaction, with specificity ranging from street address to region, state, county, city or ZIP code.”
  • Digital Identity Provider — in addition to verifying attributes of identities issued by other organizations, the Post could act as an identity provider itself, verifying digital identities of individuals and organizations online.

The following Postal Operators provide digital identity services:


Identity Service



Post Nord (Denmark)


Authentication utilizes banking ID, legal address, and social security number. One-time scratch code card is posted to physical address for multi-factor process.

Online via banking information.

Itella Post (Finland)


Register through bank identity, national chip card or at Post Office.

Online via bank process, utilizing social security number or in-person with issuance of one- time password.

Deutsche Post (Germany)


Uses Deutsche Post's own "Postident" on-line certification process.

In-person, validated against government databases.

Poste Italiane (Italy)

Poste mailbox

Uses Poste Italiane's own on-line certification process.

In-person, validated against government tax codes and social security number.

Swiss Post (Switzerland)

Swiss Sign

Online registration and validation against national databases.


 Reference: U.S. Postal Service Office of Inspector General, Digital Identity: Opportunities for the Postal Service white paper. 

How Digital Identity Benefits Internet Merchants

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To improve engagement and conversion rates, Internet Retailers need better customer profiles. Digital Identity helps map customer behavior across different channels, use analytics to refine their customer journeys, and predict buying habits based on historical patterns. It also allows them to deliver tailored content, special offers, recommendations, and rewards based on loyalty schemes.

Additional benefits include:

  • eCommerce — increase shopping cart conversions, product discovery, and loyalty
  • Omni channel — deliver consistent experience, products, and response across multiple touchpoints
  • Profile Management — aggregate, filter, segment, and develop offerings that match with customer profiles, such as demographics, social, spending power, location, and preferences
  • Registration — avoid friction in registration, single sign-on to different sites, reduce password fatigue, abandonment, auto complete forms, and encourage sign up to complementary services
  • Onboarding — simplify new client onboarding, in particular for enterprise and governments
  • Single View of Customer — rich user profiles lead to superior customer experience, develop a consolidated single customer view
  • Loyalty — Improve customer loyalty and advocacy, Stronger engagement


For Posts, the window of opportunity to claim a stake-hold in digital identity is closing fast.

Although a common set of standards and protocols have yet to be agreed, technology companies and internet retailers are actively exploring this area.

To take full advantage of the opportunities offered by eCommerce, Posts can help shape the future of identity and extend the Universal Service Obligation by providing citizens with a secure and trusted channel for online communications and commerce.


Digital Mail White Paper