India Stacks Initiate Debate for Global Participation

The city of New Delhi witnessed a pivotal conference attracting international experts and industry leaders to delve into the transformative potential of Digital Public Infrastructures (DPIs) in the realm of identity. Organised by APSCA (Asia Pacific Smart Card Association), the industry organisation for payments and identity in Asia, the conference – ‘Digital Transformation via Open Public Stacks’ (DTOPS) – was held July 20-21, 2023.

DTOPS is an extension of the APSCA Identity India 2022 forum, which explored the latest developments in government identity, highlighting initiatives and lessons learned in India.

DTOPS 2023 didn’t just mark an intellectual expedition; it was a pioneering endeavour that voyaged into the heart of the significance of DPIs, with identity taking centre stage. The event garnered the support of organisations such as the National Health Authority of India (NHA), Modular Open-Source Identity Platform (MOSIP), Foundation for Interoperability in Digital Economy (FIDE), and Open Network for Digital Commerce (ONDC). This significant gathering was supported by industry sponsors including Mantra, NXP and Touchless ID.

The DTOPS 2023 agenda is to bring together India Stacks stakeholders to share their experiences and explore best practices for creating identity-driven social and economic transformation, inclusion and empowerment. India Stack is the collective name of a set of commonly used DPIs in India, which consists of three different layers Identity, Payments and Data.

Building on digital identity – government and industry

Kicking off the conference were keynote addresses Greg Pote, Chairman of APSCA and Dr R S Sharma, former CEO of NHA, Secretary of the Ministry of Electronics and IT, Chairman of Telecom Regulatory Authority of India (TRAI) and founding DG, UIDAI (Unique Identification Department of India – the body responsible for AADHAR identity).

In his opening remarks, Greg said, ‘This forum focuses on how digital public infrastructure can transform economies, using open public stacks to enable new ways of delivering services based on identity, payments and data exchange. Over the last ten years, India has demonstrated how digital public infrastructure can provide a foundation for developing a wide range of digital services that can transform an economy at population scale in a short period.’ 

Dr. R S Sharma, as former CEO of the NHA and a pivotal figure in India’s Aadhaar initiative, shared his invaluable experiences. ‘Aadhaar,’ he elucidated, ‘constitutes the cornerstone of India’s digital identity odyssey. The fusion of Aadhaar and digital technology resulted in 500 million new bank accounts opening in just four years, underscoring the transformative power of digital identity in financial inclusion.’ 

The global impact of open-source identity solutions was enthusiastically discussed and dissected. MOSIP shared their open-source platform for establishing national ID systems. Their efforts have already borne fruit in numerous countries, with Guinea, Togo, and Ethiopia being noteworthy beneficiaries. Particularly significant was the case of the Togolese Agency for Identification (ANID-TOGO), which joined forces with Atos and IDEMIA to construct a national biometric eID system, modelled on MOSIP principles and funded by the World Bank.

Mantra Softech contributed valuable insights into biometric security enhancement, underlining the critical need for hardware-level encryption and the integration of AI-based spoof detection mechanisms.

eID & passports – evolution and trends

Sharing trends on eID evolution, NXP stated that offline identity validation will be the critical driver with online additional factor authentication.

Veridos shared insight on Bangladesh’s transformation journey from Machine Readable Passports (MRP) to locally produced ePassports. The €340 million contract between Veridos and Bangladesh’s Ministry of Home Affairs covers the entire value chain for ePassports, from security paper to eGates, including setting up a local passport factory with high-tech equipment. The ePassport has an embedded electronic microprocessor chip containing biometric information to authenticate the bearer’s identity. It incorporates 38 security features, including a colour picture of the bearer on the polycarbonate data page (see IDN July 2019).

Bangladesh ePassport, winner of HSP, Regional ID Document of the Year 2021

Plan for paperless documents

Sharing its plan for paperless documents, IATA provided insight into its One ID project, which brings biometrics, electronic boarding passes and travel visas into a single digital travel document. IATA sees this project as a possible solution to tackle booming passenger rates, which it expects to hit 8.2 billion by 2037.

While still in its infancy, One ID is gaining traction among industry bodies, governments and other stakeholders and endorsement by International Civil Aviation Organisation (ICAO), which is cooperating on the project. Existing models include the US CBP TVS system, the Indian Digi Yatra Biometric Boarding Process, other airport-based enrolments in collaboration with partners, and some airlines/alliance programmes to enrol passengers.

In a similar project, the founder of Digi Yatra shared the experience of contactless biometric authentication from the Indian perspective. DigiYatra is an industry-led initiative coordinated by the Indian government. It is a biometric-based mobile application facility for airport entry. Under this contract, DigiYatra is using IDEMIA’s FR technology to verify the identity of domestic flyers, making terminal entry and security clearance at the airport a seamless, hassle-free, and paperless process.

In December 2022, the facility was launched in three airports – New Delhi, Bengaluru, and Varanasi. It was later introduced in Vijayawada, Kolkata, Hyderabad, and Pune airports in April 2023. The government plans to launch the facility in the coming months at seven more airports, including Chennai, Mumbai, Jaipur, Lucknow, Ahmedabad, Guwahati and Cochin. Over 1.746 million individuals have used this facility.

SITA shared DTC (Digital Travel Credentials), a digital representation of a person’s identity, typically derived from a physical ID such as a passport.

Stacking up the benefits – lessons from India’s digital journey

While day one was more on eID, travel documents and DPI, day two talked about India’s DPI journey in building digital economies and payment innovation, empowering citizens’ financial inclusion.

Representatives from NPCI, PayNearby, WorldBank, Touchless ID, EkStep Foundation, Co-Develop, Sahamati, and ONDC presented their thoughts.

The presentation from Touchless ID was interesting, as it provides mobile-based solutions to capture finger and face biometrics replacing the hardware biometric scanners.

Digital transformation through payment innovation

The highlight of day two was presentations from NPCI and other institutions using India Open Stacks to build payment innovations in the country. NPCI speakers shared insight on UPI – Unified Payment Interference, now the world’s fastest-growing payment system.

A presentation from PayNearby talked about Aadhaar Enabled Payment System (AePS). Launched in 2010, the AePS enables Aadhaar cardholders to make cash transactions at micro-ATMs or point-of-sale machines using a unique identification number (UID). AePS is significant because it allows individuals to participate in the formal economy and promotes financial inclusion. The AePS enables users to transfer funds, deposit cash, withdraw money, and check account balances, among other features.

All these innovations are built on the Aadhaar ecosystem and played an essential role during the COVID-19 pandemic. Aadhaar in India is the first step to bringing everybody into the formal financial ecosystem. With Aadhaar and digital technology, 500 million new bank accounts were opened in four years.

Former CEO, NHA Dr R S Sharma providing ABHA cards to the visitors.

A representative from NHA shared how Healthcare in India is getting a digital makeover under Ayushman Bharat Digital Mission (ABDM). Since its launch in September 2021, under the ABDM, over 250 million ABHA numbers (earlier known as Health ID), 150,000 health facilities registered in the Health Facility Registry (HFR), 8,000 healthcare professionals under the Healthcare Professionals Registry (HPR) and 11 million health records of individuals are linked to ABHA.

Challenges and Learnings from India Journey

While Indian Open Stacks made significant progress, delegates discussed the challenges India must address in the coming days.

Digital Literacy: Despite significant progress, digital literacy still needs to improve in India. Certain features of India’s journey would be difficult to replicate elsewhere. Still, these are not preconditions for success; for example, individuals need access to a smartphone and a bank account to access the full functionality of India Stack. For other countries with low adoption of smartphones and lack of access to banks, payment systems based on mobile money that can be used on a feature phone are the dominant form of digital payment.

Reality in Rural-vs-Urban Divide: The first step towards financial inclusion is a bank account. At first glance, India has made significant progress, as 80% of the population had bank accounts in 2021, compared to 53% in 2017. However, a closer look at the data reveals that of those with bank accounts, 38% have inactive accounts, making India the country with the highest share of inactive accounts worldwide. While the popularity of UPI has increased substantially in recent years, only 35% of the population in India reported carrying out any digital transaction (making or receiving a payment) in 2021.

If we look at the rural-urban gap in digital payments, India again stands out compared to countries such as Bangladesh and Kenya. Only 30% of Indians in rural areas made or received any digital payment in 2021, as opposed to 40% in urban areas. This again indicates that a substantial share of the population has been bypassed. Bangladesh had no rural-urban divide (both rural and urban figures were 45%). In Kenya, 74% of the rural population carried out digital transactions, while responding figures in urban areas were 87%.

Robust Framework: Indian stacks have developed innovative models such as AePS. However, as per experts, AePS took off well during the pandemic, but after that, it declined, wherein use cases were replaced with other payment products. AePS heavily relies on biometric authentication, which can be problematic for specific segments of the population, particularly those who are illiterate, elderly, or physically challenged.

Innovative solutions must be designed to address challenges related to AePS authentication. The key is a robust legal and regulatory framework to safeguard against misuse and data breaches and protect individual rights.

Digital Fraud: With increased digitisation, fraudsters and criminals have adapted themselves to digital evolution, as the digital fraud tally nearly doubled in recent years. From disguising collect requests as fake cashback offers and QR codes to creating spoofed VPAs for refunds, disaster support, etc., UPI-related frauds are a significant menace in the Indian payment ecosystem. While 3,596 frauds amounting to Rs 1.5 billion using cards and internet banking were reported in FY 22, the volume nearly doubled to 6,659 digital frauds in FY23, amounting to Rs 2.76 billion.

Globally, in 2021, over 293 million people were impacted by data breaches, with identity fraud losses rising 333% since 2017, amounting to $56 billion in 2020.

Tackling AI & Deep Fakes: With the increased usage of new tech line AI, it is much easier to fake a digital identity. The surge in new technology like artificial intelligence (AI) to impersonate individuals’ voices and faces has become more prevalent, making it more challenging for businesses to verify authentic identity. With social engineering, fraudsters can leverage compromised data to authenticate verification by creating new profiles with documents, voice cloning, or facial images.

Global Standards: The world needs to develop international standards for DPI that mediate the flow of people, money and information while ensuring trust and platform use – without fear of exclusion or exploitation. DPI models backed by philanthropic funding are at risk of becoming a tool for philanthropic positioning and competition.

India’s massive DPI, centred around public interest, is a marvellous model for other countries as citizenship becomes a digitised phenomenon globally. While India has made significant strides, it still has a long way to go in becoming Digital India. It is vital that DPIs not succumb to monopolisation, authoritarianism and digital colonisation. Further, while the whole concept of DPI focuses on ease of business and living, we must remember the need to balance physical and digital.

The global community now looks toward the next edition of DTOPS, scheduled for Spring 2024 in New Delhi. It promises to be another crucible of dialogues and innovations, setting the stage for the future of digital identity and public infrastructures worldwide.