The latest purchase is a signal of Interac’s ambition to create a Canadian standard for digital identification that could be as ubiquitous as its payment services.Deborah Baic/The Globe and Mail
Interac Corp. has reached a deal to acquire the Canadian rights to SecureKey Technologies Inc.’s digital-identification services as the payments giant looks to build more secure ways to verify who is involved in online financial transactions.
Toronto-based SecureKey is a prominent provider of authentication technology. It owns the Verified.me system that allows taxpayers to log in to Canada Revenue Agency accounts using their banking credentials. The company has partnerships with all six major Canadian banks, which are shareholders in Interac.
Financial terms of the agreement were not disclosed, but it is Interac’s second significant investment in digital identity, after a previous acquisition of Ottawa-based 2Keys Corp. in 2019.
It is also a signal of Interac’s ambition to create a Canadian standard for digital identification that could be as ubiquitous as its payment services – which process six billion transactions a year – as global technology companies and payments giants are vying to attract consumers and businesses to digital wallets.
There is increasing urgency in the financial sector to develop better ways to authenticate clients’ identities as more transactions move online, payments systems settle more transactions instantly, new forms of online fraud emerge and Canada inches toward creating an open banking regime. But the range of applications for digital identity systems is much broader than financial transactions, including a safer way to share personal information when applying for a credit card, renting an apartment or renewing a student loan.
“We can do the same platform at scale, economically, safely, securely, with privacy by design in digital ID that we did for the debit environment,” Interac chief executive officer Mark O’Connell said in an interview. “This is going to touch every single government entity and commercial business in Canada in the next 10 years.”
Interac’s agreement with SecureKey keeps the two companies separate, but forges a long-term partnership. Interac is taking over SecureKey’s digital ID services in Canada, acquiring its domestic business contracts and licensing its intellectual property exclusively. SecureKey plans to pursue similar licensing arrangements in Australia, the United States and the United Kingdom.
Both companies are hoping to boost uptake of SecureKey’s services by tying them to Interac’s brand, with its connection to nearly 300 financial institutions. They also hope that will help it stand out as an alternative to digital wallets and identity tools being crafted by tech giants such as Google and Apple Inc., as well as credit card leaders Visa Inc. and Mastercard Inc.
“I do think this will be a crowded space. It will be competitive,” Mr. O’Connell said. “We are betting on the fact that our model is open, standards-based, made in Canada, the data resides and stays in Canada and it will have ubiquitous reach given the Interac ecosystem.”
SecureKey combines encrypted data from different sources – banking credentials, identity documents and physical devices such as mobile phones – to let users choose which sensitive information to share. When showing ID to buy alcohol, for example, a user could prove their date of birth without also handing over their name and address.
“Being able to have this in your phone, being able to share that my bank says it’s me and the driver’s licence says it’s me, the combination of those things is what’s going to keep people safe,” SecureKey CEO Greg Wolfond said in an interview. “If I could show up at an apartment and prove that my credit score is over 500 and my income is over this level, bringing in data from Equifax and from government entities, and then I could pay them the first and last month’s rent, that’s where this is going.”
The COVID-19 pandemic has sped up adoption of digital services and payments, but also highlighted the limitations of systems requiring paper documents and signatures in ink, while exposing some consumers and businesses to fraud. Interac and SecureKey have both worked with governments on digital verification – sometimes jointly – and say Canada is on the cusp of taking a critical step: Issuing core identity documents such as driver’s licences and passports in digital form.
“The pandemic has greatly accelerated this in Canada,” Mr. O’Connell said. “This has been an epiphany both for the public and the private sector that we need the next generation of digital ID and authentication technology in this country to eliminate this fraud and waste and allow Canadians to have easier access to services online safely.”
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