The Interac Association could play a key role in helping to secure transactions conducted on a digital identity network that’s being built by Canada’s major banks.

Canadians are already used to carrying around debit cards in their wallets from their banks that can access Interac’s cash and debit services. Now it looks like Interac is working with the major banks again to provide services that would secure the blockchain-based transactions fundamental to the digital identity system.

Interac is a member of the board of directors at the Digital Identity and Authentication Council of Canada (DIACC), alongside BMO, CIBC, Desjardins, and TD Bank. Also on the board of directors is Toronto-based SecureKey Technologies, which is using IBM’s blockchain platform to build an identity attribute-sharing service. In a new white paper on digital identity, Interac makes the case for how its network and tokenization service offers an ideal backbone for the service the DIACC is working towards.

Canada needs to introduce a digital identity system to solve the challenges of increasing identity theft and fraud, says Neil Butters, director of product and platforms at Interac.

“Current digital identities don’t provide a sufficient level of identity and authentication. There needs to be a digital variant of existing physical identities,” he says. “We’re trying to spur the digital economy in Canada.”

To do so, Interac points to its tokenization service, which provides a layer of security through abstraction. It divides a person’s identity from a sensitive detail such as a bank account by issuing an identifier that can act as a proxy. That identifier is confirmed by the individual’s service provider and the transaction is allowed. Tokens can have security limits placed on them, such as only being valid at a certain place and time, to protect against abuse. Interac’s tokenization system is used today for its e-mail money transfer service, and also to support debit payments on Apple Pay.

“It’s a cryptographic capability used to secure the blockchain,” Butters says. “Tokenization provides a strong issuance process for a digital identity solution.”

Interac ID and authentication system
Functions of an ID & authentication system according to Interac: 1) Created an ID with supporting pieces 2) Add contextual and behavioural attributes 3) Authenticate and use digital ID.

Interac is a strong partner that’s aligned with SecureKey’s vision of digital identity, says Greg Wolfond, the CEO at SecureKey. It’s good to recognize that there’re currently problems with digital transactions that need to be solved. And tokenization does help solve the problem.

“These things go well together, like peanut butter and jam,” he says. “You’ll need to be able to prove who you are and you’ll need to make payments.”

Supercluster shortlist miss

As part of the DIACC, Interac and SecureKey were gunning for federal money under the Innovation Supercluster Initiative. It had put together a coalition willing to commit $185 million in funding towards the opening bid.

The DIACC proposal wasn’t included on the supercluster shortlist recently unveiled by the Liberal government. But both Butters and Wolfond say that won’t deter them. The DIACC can still accomplish what it’s set out to do without government funding, they say.

“Everyone still understands the need for this across government and business,” Wolfond says. “We’re unfazed really.”

Still, it’s going to take a bit more time than SecureKey and its partners anticipated at the beginning of the year. Originally looking to launch in late 2017, it will now go live some time in 2018.