Peter Nowak: Virtual ID is going to kill off the leather wallet

When Oliver Morley, chief executive of the UK driver and vehicle licensing agency, flashed an image of a prototype digital driver’s licence on Twitter this week, it was a reminder that the wallets many of us carry in our back pockets will soon become an endangered species.

In follow-up tweets, Mr Morley explained that the virtual licences are intended to complement cards, not replace them. But the writing is on the wall — in the not-too-distant future, all of our important identification will reside as digital bits on our phones while plastic and paper cards will be resigned to the trash heap of history.

For anyone who has lost or had a piece of ID stolen, or even for those of us who routinely fumble through our wallets looking for the right card, that future can’t come soon enough.

Fortunately, the war on cards is brewing on all fronts, in a growing number of countries.

The UK isn’t the only one moving to digital driver’s licences. Several US states, including Iowa, Delaware and California, are in various stages of testing them, while Australia plans to start offering virtual cards by 2018.

Australia is indeed paving the way in the elimination of all manner of paper and plastic ID. By the middle of this year, Australians living in the state of New South Wales will be able to get digital licences for fishing, serving alcohol or operating a gambling establishment. The government is looking to add another five categories by next year.

Not content to stop there, Australia and New Zealand are looking to test virtual passports, which will allow citizens to travel between the two countries with nothing but their phones, if they so choose.

"We think it will go global," Foreign Minister Julie Bishop told The Sydney Morning Herald last year.

The advantages of digital identification are numerous. In Australia, an applicant must typically wait three weeks for a fishing permit to be processed. “With a digital system, this will be available instantly,” said Dominic Perrottet, a member of Parliament, in a speech last year.

Virtual ID won’t just be a digital replica of the physical version. Licences and passports will be easy to renew and update, so we won’t have to trudge into an office somewhere and stand in line for hours just to lodge a change of address.

Digital ID can also be linked to biometrics, making it more secure. Just as mobile payments systems such as Apple Pay incorporate an iPhone user’s thumbprint in validating transactions, so too can passports and licences be linked to verification methods that are hard to fake. Photos, Pin codes and even voice prints can be added.

After years of promises of a cashless society, cash itself is also starting to look like an endangered species. North America is leading the way, with non-cash transactions now accounting for 52 per cent of the total, followed with Western Europe at 34 per cent, according to the consultancies McKinsey and Capgemini.

The UAE is at the low end of this trend, with cash still making up about 92 per cent of transactions, but the country is on the verge of entering the “transitioning” category. Growth is expected to be quick from here on in.

Financial payment companies including Visa and Mastercard are also offering virtual cards, while banks are increasingly allowing customers to make transactions via smartphone apps. Add in all manner of retail loyalty programs — from Starbucks to Coca-Cola — already making the move to apps over cards, and that covers just about everything that might be found in the typical wallet.

The trend toward virtual ID is rightly spurring security and privacy concerns, which is why the movement is going slowly for now. In the case of driver’s licences, for example, there are questions of how to keep the police officer who pulled you over for speeding from browsing leisurely through the other personal information on your phone.

There’s also the enduring possibility that all of this virtual identification will eventually be hacked and stolen.

These are serious concerns, but better encryption and biometric tools will do much to assuage them and cause comfort levels to grow, much in the same way that many people are now fine with using cloud-based services to store documents and even health records.

With the wallet-less future beckoning, another poignant question arises: Will we still need back pockets in the future?

Peter Nowak is a veteran technology writer and the author of Humans 3.0: The Upgrading of the Species.

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