Kati Suominen, Founder and CEO of Nextrade Group; Technical Director of the Alliance for eTrade Development
Trust has for centuries been critical also for international trade. Lack of trust between buyers and sellers located far apart has curtailed trade and kept vast majorities of businesses from ever exporting. Over the past two decades, ecommerce has accelerated trust-building by enabling buyers to quickly find sellers, access sellers’ customer reviews, use secure payments, and resort to online dispute resolution mechanisms, among other benefits.
Yet one vexing problem remains in online transactions: how does the buyer at the other end of a transaction know that the seller is who they say they are, and vice versa?
This question is timely and policy-relevant, given the growing challenges posed by cybersecurity threats and identity theft to firms around the world, and the rapidly expanding opportunities for micro, small, and midsize enterprises (MSMEs) to use ecommerce to recover from the COVID-19 crisis. The challenges with trust online transcend the relationship between the seller and buyer—they shape MSMEs’ access to the many services they need for doing cross-border ecommerce, such as access to marketplaces, and financial, insurance and logistics services.
A self-sovereign corporate digital identity that is unique to each seller and associated with the seller’s enterprise and transactional data would be a powerful solution to these challenges. It could dramatically accelerate marketplaces’ customer authentication and verification (A&V) processes, banks’ KYC processes, multinationals’ supplier onboarding, and MSMEs’ trust-building with prospective buyers. A digital ID could also promote interoperability across marketplaces and services: an MSME could use one “master key” with the same credentials and data on their proof of existence, features, and transactions with each marketplace, bank, logistics provider and government agency.
The purpose of this white paper is to help accelerate the adoption of scalable and secure self-sovereign corporate digital IDs, with the goal of helping developing country MSMEs to engage in trade and ecommerce. Specifically, this paper:
Reviews the pain points facing marketplaces, financial services, governments, and buyers and sellers in authenticating MSMEs online;
Assesses the features, use cases, and value propositions of different types of corporate digital ID systems for MSMEs, service providers, and governments;
Discusses the many challenges facing developing countries that might seek to build their own corporate digital ID systems from scratch, such as costs, legal responsibilities, and challenges of international interoperability; and
Proposes a scalable self-sovereign ID system that draws on a wide range of public and private data sources and is globally interoperable.