So now to discuss the herd of elephants in the room…..What I am seriously missing is some business models for public Digital Wallets that work.
In this initial paper, let us look at revenue sources (Please highlight more if I have missed some out)..
1) Relying parties
2) Credential Issuers
3) Government ecosystem owner (subsidies)
4) Non-Government ecosystem owners
5) Payment processors
6) Advertising
1) Relying parties
This is the most obvious source of revenue. If you use a credential or wallet interaction in any way, and are thus improving your efficiency, then you do (or should) make a financial gain somewhere either directly or indirectly. Otherwise, why use them? This may just have some market share implication. Either way it is of value. This is also not without precedent. Vendors already pay a percentage (1%-3%) to their credit-card payment processors on each transaction. The question is how much more will they pay? Consider that if payments are made via the wallet, the vendor may not pay for the transaction (yet to be determined). Therefore a 1%-2% value would seem feasible and economic.
This also would hold true for B-2-B and other (non-sales) B-2-C, where there is an efficiency value whether it is financial or process driven. This is especially valid if the transaction is part of a larger workflow, where they are partaking in a chain of events between numerous parties. The cost of ‘being in the game to play the game’. The use of a pre-built workflow is also potentially chargeable.
For Government departments interacting with the public or businesses, being a relying party using wallets permits a potential for greater levels of automation. Credentials that are relied upon will be transferred in machine readable format. What they do after they are received is actually something else….(print onto paper and then lose?). Nonetheless there should be efficiencies, which can be monetised.
2) Credential Issuers
For a credential issuer to provide a digitised version of their credential to a wallet for later distribution, will provide once-2-many opportunities, saving ongoing efforts for the period of credential validity. A short credential shelf life will eat away at the benefit though. Making a credential easier to issue will mean greater ‘market’ penetration. Credentials can increase the potential for wallet users to participate in actions/activities that benefit the credential issuer directly or indirectly. An example could be a club or union offering discount vouchers to its members.
3) Government ecosystem owner (subsidies)
The obvious issuer, where credentials that are at Level of Assurance 3 (LOA3) can be relied upon by other governments, government departments and any authorised (certified and/or licensed) organisation. Passports, visas, mDLs, etc are all easier and cheaper to issue digitally thus saving money. For these dedicated LOA3 wallets, such as EUDI wallets, there is already government subsidies reflecting real savings. (It is unlikely any government agency would pay for accepting credentials).
4) Non-Government ecosystem owners
If the ecosystem (scheme) is privately operated, for commercial reasons or otherwise, say as part of a cooperative, then there is ultimately a beneficiary. Say a transport association of freight hauliers. There could conceivably be a service fee or membership which would be partially used to operate the scheme.
Another example is a private health union, such as BUPA which could provide signed credentials for authorising treatment at point of issuance rather than existing on-line systems, and could even contain payment instructions as part of an automated workflow. The workflow, however sophisticated for commercial, professional and financial safeguards, once set up, would simplify operations significantly. A private ecosystem would keep commercial advantage.
5) Payment Processors
This is obviously an opportunity to recover any revenues lost due to direct payments (not via credit/payment cards) made through wallets. By inserting themselves as part of the payment process within wallets they are ensuring their own revenues, and subsequently a small part of their service fee, which they will find a way to obtain from the vendor. My guess is that will be by either a fixed fee, or a % of any amount at point of receipt – anonymised of course.
6) Advertising
This is the most controversial of all the revenue sources. For many (non-government) wallets, transactions could be funded through advertising. How would this work?
I could see a header or footer displayed in the wallet only and attached to a credential. This could vanish when the credential is offered up as part of a transaction, or less acceptable, could travel with the credential to the relying party (although how that might work in an automated system is questionable). The governance of such advertising, its targeting and content would need to be managed and licensed. Here this is an option for the wallet holder to pay a small service fee to remove advertising from the holder’s wallet. I know that I would pay a couple of Euros per month for that! It would be trivial to enable such blocking of the advertisements in the wallet. It is conceivable that the wallet could hold a cookie to determine the type of advertising shown…..(urgh, I had hoped that we had gotten away from cookies!). Needless to say, government wallets would be without advertising (probably, but pertinent service reminders would be interesting).
Anyway, other issues that need to be considered for the revenue side (but also maybe for the monetisation distribution side too) is the anonymised auditability and any other privacy issues.
On the auditability side, this has to be unlinked from intended use, but not usage. This may require a clearing house functionality. This would be in a service which collects the above revenues and also distributes those revenues to the QTSPs and other service components.
The next paper will discuss how these revenues might be distributed.
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