At Money 20/20 Europe in Amsterdam, FinTech future sat down with Digiseq President David Birch to discuss what makes the wearable payment disruptor’s chips both smart and secure, reinventing loyalty programs, the difference between identification and authentication, and never have to carry ID to the pub again.
FinTech Futures: Can you give me a high-level elevator pitch for Digiseq?
David Boulch: Digiseq turns objects into things that have an identity, and that identity can be used for all sorts of different things. Currently, many people use it for payments. Thus, we have watches, bracelets, key rings and even pretty fashion items.
The thing is, we put a secure chip in things. You can use barcodes, but that’s not the same as putting a secure chip inside, and those chips have the kind of security that years ago cost thousands of dollars. Now it’s a 40 cent chip.
You can have full public key cryptography, symmetric and asymmetric cryptographic security. So, you can do amazing things with Payments, but while Payments is a popular app, it’s just one of them.
Is it part of the wider Internet of Things (IoT) now that the chip cost barrier is so low?
Yes, but we like to distinguish what we do because ours are secure chips. It’s not just about inserting an RFID chip into something. These chips can store data, they can respond to queries, you can configure them to only respond to people who have permission to access them. So it’s not just about putting tokens in things. It’s putting chips in things with real security.
We talk about security – biometrics is considered very secure. How does Digiseq integrate with biometrics?
Biometrics is very secure. But there is a world of difference between identification and authentication.
If you walk into a store and the store scans your face and identifies you, that’s pretty handy. But it’s also a little worrying that they now have this database and these face models. What if you don’t want to be identified? What if you just wanted to come in and look around?
I happen to like keychains, but others like watches and others like rings. The possibility of authenticating them simply by tapping, for me, is much better. I prefer to take action.
Biometrics is fantastic and you can see them coexisting. But I don’t know if people really think about the implications of having their face scanned everywhere.
Here it is tokenized. You know it’s not your data. It’s just your authentication.
How can Digiseq be used to improve customer loyalty programs and generate new revenue streams for brands and other businesses?
I will give you a concrete example. We make key rings for the Spanish La Liga football club Real Betis. These key fobs have both access control and payment identity, so fans can use the key fobs to enter the ground, then when in the ground they can use key rings to buy drinks at the bar. Which is interesting and it’s practical and fantastic.
So now think outside the ground. If I go to a store and buy something with my phone, I take my phone out, unlock it. I’m buying something, it’s unbranded. If I’m a fan, I want this payment marked. There are these issues around brand and identity that again I think get overlooked when people talk about biometrics, for example.
Another area of interest is central bank digital currencies (CBDCs) and tokenization. None of this is ready for prime time just yet, but over time it will be and using it to access a remote wallet is completely acceptable. I think in the short term, what you might see is more of this link to instant payments.
In a way, I’m a little surprised that more retailers haven’t already been pushed in this direction. The idea that if I walk into the Waitrose supermarket and Waitrose knows who I am, it seems pretty obvious for Waitrose to just go to the bank and say, ‘it’s Dave, please transfer the money”.
The idea of this link between loyalty and payments through the back-end, through instant payment networks, rather than through card networks, if I had to pick one key trend, I think it would be this. If the retailers have identified you, they probably know more about you than the bank anyway.
Many large supermarkets have offered these loyalty programs for decades. Do you see any other interesting or promising uses for this technology that aren’t on the market right now? Toys, cars, clothes, for example.
Fleas in toys are not a new idea. Yes, we can do it more securely. But you have to be very careful with the toys because they have to be in an infrastructure that enforces privacy.
The chip is only part of the ecosystem, you need the other pieces of infrastructure to make it work. The clothes are a little different. You could go to a nightclub with a shirt that you could use to pay for things, so you didn’t have to take your wallet with you.
You can also use it for identification purposes. It’s a little strange, certainly in the UK, to force drunk teenagers to take passports and driving licenses in clubs and bars!
The idea that the chip contains identifying information about you, not just payment credentials, but other identifying information such as proof that you’re over 18, I think that has sense.
If I wanted to give you a key fob to use at Glastonbury music festival or something that’s different from a general purpose payment use case because you bring in all these promotional and branding issues .
The item you use on the Tube may not be the same item you take to the nightclub or to the sporting event.
We’re considering keychains and watches and things like that, but we put them in the Lucozade drink bottles.
We put them in the Golden Globe Awards, so you could tell which were the real ones and which were the press copies.
Once the object has an identity, then you can connect it to the digital world. You now have this bridge between the physical and the digital.
What people are going to use this technology for, there are a million different ideas. Right now, we’re focusing on payments, because that’s our big business. But in the future, people are going to use it for all sorts of things.