cheqd provides the platform to help companies and individuals trust each other in a more secure, efficient and commercially sustainable way using digital credentials. Moreover, this trust can be established without reliance on a central intermediary, meaning that no direct relationship is needed between the parties issuing, receiving or charging for trusted data.
This two-part series of blogs will tackle how cheqd differentiates itself in the data market, addressing this topic for different audiences with different levels of knowledge of expertise of cheqd and the industry:
Blog 1 (this blog) is targeted at a general audience, exploring how cheqd unlocks new data markets and differentiates itself against traditional identity companies.
Blog 2 is targeted at a narrower audience, explaining how cheqd differentiates itself from other identity networks and what technical innovations make it an industry-leader, such as credential payments.
Following these two blogs, the reader should have both a holistic and nuanced understanding of how cheqd positions itself and stands out in a competitive data market.
Addressing problems in the data market
Prior to explaining the how, it is important to explain the why. There are currently significant challenges for companies around customer identity assurance and verification, where it is too costly in terms of time and money to build trust in their customer-base.
cheqd has positioned itself to solve three major challenges faced by most businesses acting in the digital domain or providing an online service.
1. We reduce the cost of customer verification
For many online platforms and businesses, it is too expensive to pay for customer verification, resulting in weak or non-existent identity assurance.
This leads to bots, scammers and malicious actors exploiting digital spaces with little repercussions. To put this into perspective, the cost of identity checks is roughly as follows:
- Basic Know Your Customer (KYC) check: $5 – $10
- Criminal record check: ~$50 – $100
- Company background (GLEIF-accredited LEI): >$100/year
As such, e-commerce platforms, online gambling services, alcohol vendors or adult content platforms have resorted to simply asking the good-will of the individual to self-attest to being over the age of the legal requirement to access their site. These platforms would rather take the risk of having unverified users, than pay a $5 fee per customer.
Not only is this a problem for bots, scammers and malicious actors, but it is also dangerous for children, increasing their potential exposure to restricted sites and content and breaching online child protection regulation such as Children’s Online Privacy Protection Act (COPPA). Recently, in the UK, Ofcom have declared that this “self-attestation” is not enough and that digital credential wallets may be required.
Moving into a world of digital credential issuance, especially with the new amended eIDAS 2.0 regulation, online service providers will be required to accept digital credentials for identity verification and also parental consent.
Where cheqd provides significant value here is providing the infrastructure for reusable and verifiable credentials, in order to reduce the cost of an identity check down from ~$5 per verification to ~$0.10. Through this increased efficiency and cost reduction, this unlocks the option of customer identity checks in domains where it was previously too expensive.
This solves a significant problem that many industries have in verifying customers using their platforms, in a manner which is cost-effective, reusable and future-proofed against upcoming regulations.
2. We reduce the capacity for fraud and scamming
Messaging platforms and emails also suffer with a lack of trust. Many scams and phishing attempts impersonate real people or companies with malicious intent, and it is becoming increasingly difficult to discern between a real person and a fraudulent one.
Within the Web3 space, we regularly see fake emails and messages from companies purporting to be from centralised exchanges, such as Binance. One email was even so sophisticated that multiple members of our team were deceived as the senders’ email was spoofed from a real Binance email address. For everyday users, this creates a very high security risk and surface area for falling foul to a scam.
At cheqd, using verifiable credentials, we reduce the capacity for fraud and deceit by providing a mechanism for companies and individuals to request a trusted credential from each other and trust the root authority that it was issued from. Since these credentials are cryptographically signed by a trusted party, it provides a much higher level of assurance than simply relying on intuition and common sense.
Check out my Creds below to trust that I’m a cheqd team member!
3. We reduce the time and effort needed to check someone's identity
Many industries spend an inordinate amount of time on identity verification and manual checks. For high value transactions such as conveyancing, or visa applications we frequently see a points scoring system for identity assurance, where different documents carry different levels of assurance.
Traditionally, these point scoring exercises require a customer to provide at least “100 points” worth of trust, where each document or certificate has a particular score attached to it. The general premise is that the higher the score, the higher level of confidence a third party has in your docs/identity, where 100 is the “pass point”.
With Verifiable Credentials, a user can hold multiple credentials within their identity wallet, and present them concurrently within a single proof to third parties to compile a trust score of 100 or above within seconds.
Owing to the security features of verifiable credentials, and also the legal value given to credentials within eIDAS 2.0, this can save companies significant time and resources currently spent sanity checking manual data. This can be applied to solve problems across use cases such as conveyancing, immigration visas, lending or credit scoring to name a few.
We previously wrote about this concept of instantaneous time to reliance in our blog on the role of cheqd in trusted data markets here.
Case study: Reusable KYC unlocked with FinClusive & Verida
Following our partnership announcement with Verida, we have integrated Credential Service with FinClusive and Verida wallet to streamline the process of onboarding to financial services across web2 and web3, in a regulatory compliant way.
Through reliance on digital credentials, and real-time revocation checks against the cheqd network for AML compliance and other sanctioned lists, we improve the onboarding experience for credential holders, reduce the cost of traditional identity verification and the time taken to verify a customers’ identity.
We will also be using our Credential Payments product to layer in a commercial model for parties exchanging verifiable credentials, to incentivise their issuance and accelerate their adoption.
We are targeting this solution at onboarding to centralised exchanges, financial services and digital service platforms, such as eCommerce. We will be writing a full blog on this opportunity in the new year with both FinClusive and Verida! In the meantime, watch the demo of the integration here.
Or, if you want to apply this digital credential solution to your own company, to leverage the competitive advantages, contact our product team here.
A new revenue opportunity across industries
While solving existing challenges faced in data markets, cheqd also offers a new revenue stream for issuers of digital credentials. This incentivises the transition to credential-based technologies and offers a new commercial model for adopting credentials, while keeping prices of identity verification far below the existing model. The credential payments model can be applied across various industries:
- Financial Services: providing a commercial model for banks and other financial services that exchange verifiable data will create sustainable ecosystems and data markets.
- eCommerce: charging a micropayment for identity verification allows eCommerce platforms to prevent fraudulent actors and cybercriminals from using their services.
- Travel: charging hotels and relying parties in a travel use case a small fee for instantaneous customer verification saves significant amounts of time copying and verifying manual documents.
- DeFi: providing a regulatory compliant onboarding solution for Travel Rule that also makes commercial sense sets cheqd apart from other competitors in the space.
- Education: reducing fraud and providing verifiable education records and accomplishments will streamline application processes for jobs and higher education. Remunerating educational institutions who issue these credentials will accelerate this process and get more credentials in circulation.
In Blog 2, we will further explore how the concept of Credential Payments differentiates cheqd from other identity networks, and how verifiers paying issuers creates new sustainable data markets.
Understanding cheqd’s position in the data and identity market
With a broad understanding of the problems cheqd is solving, next it is important to explain where cheqd sits within the data and identity market. Core to understanding cheqd’s offering, is addressing what cheqd is not.
A common misconception is thinking that cheqd provides Identity Verification (IDV) services, like an Onfido or a Jumio, or alternatively that it provides Identity & Access Management (IAM) services like a Ping or a Forgerock.
In reality, cheqd does not fit into any of the pre-existing categories of companies that work on identity data. Instead, it fits within a new, differentiated category for digital credentials and Trusted Data – which is being established via global regulation and technological developments.
This next iteration of data services will see four core categories:
- Identity Verification: checking a person’s identity documents and verifying that they are a real person
- Customer Relationship Management: storing data about customers to manage relationships and provide services
- Identity & Access Management: providing functionality to configure rules and permissions for accessing services
- Digital Credential Issuance: issuing attestations about a persons’ data or identity attributes to enable data reusability
Alongside the latest global regulation, such as eIDAS 2.0, these four categories of data will all be required to utilise digital wallets for allowing customers to use the services or receive data from the service.
Digital credential issuance services enable customers to reuse data from one organisation, sharing it with another.
This allows organisations that rely on digital credentials to trust the organisation that issued the data without a direct relationship with them. Therefore, digital identity wallets holding credentials will serve as a central component that unifies and enhances the operations of IDV companies, IAM providers and CRM systems.
As the adoption of digital identity wallets increases, enterprises are likely to find new ways to leverage this technology to improve their services and enhance the overall user experience. cheqd will play a crucial role here in:
- Providing the tooling and infrastructure for digital credential ecosystems…
- that align with emerging regulations, such as eIDAS 2.0…
- while also being commercially beneficial for each party switching to the adoption of credentials.
Moreover, the large-scale adoption of credential issuance technologies is no longer a question of “if”, it is a question of “when”. With monumental regulatory changes to require the use of digital credentials, the goal now is to educate about the benefits of the technology and why it is sensible to switch sooner rather than later.
Stay tuned for Blog 2 which will go into more detail on how cheqd differentiates itself from other identity networks and credential issuance platforms, looking in detail at both the unique commercial model and the interoperable technical design choices.