In addition to battling fraud and delivering better user experiences, there is one area that is becoming mission-critical to every organization: privacy.
At first glance, calling something “zero-knowledge” may not sound like a positive thing. Since knowledge is typically seen as something that’s good, it would make sense that having less of it would undesirable. But there are certain situations where having less knowledge is better than having more. One of the most common scenarios is where privacy is involved, and that is where the technical term zero-knowledge—which refers to a method where the yes or no answer to a question can be shared without revealing the actual details of the answer—comes into play. But before we delve too deeply into that, let’s look at a basic example of how a zero-knowledge proof works:
If a bank would like to check if a customer’s phone is in the city where an unusual transaction is taking place, then the bank, with consumer consent, can ask if the phone is in that city*. The answer should be yes or no, and the actual city the consumer is in should not be returned. For example, if the transaction is taking place in Denver, and the consumer’s phone is in Atlanta, a zero-knowledge response would be that the phone is not in Denver. It would not be disclosed that the phone is actually in Atlanta.
If you think about why you would not want to disclose the actual location of the phone, it’s because that information may be used for nefarious purposes. In a non-zero-knowledge scenario, if a criminal wanted to know where a specific consumer was, they could learn the answer by asking whether the phone is in another location. With zero-knowledge, the answer that is returned is a simple yes or no and one cannot learn something new (such as a specific location) by asking a question.
*IMPORTANT NOTE: Although this example mentions location, Payfone does not use, and has never used, location data.
Another simple example of zero-knowledge identity authentication is one we are calling Maya and the Online Wine Shop. Maya wants to purchase wine online but there is an age restriction of 21-years-old or older. Maya wants to prove that she meets the age criteria without revealing her age. She prefers to have a private simple Yes/No response provide an answer that definitively proves that she is of legal age. This can happen if the online wine shop has zero-knowledge architecture, which can validate her age, without giving away the ‘secret’ (i.e. that she is actually 45 years old).
These two examples give us a basic understanding of what a zero-knowledge proof is and how it can help maintain privacy. In essence, zero-knowledge is a method of one party proving to another party that they know a value without conveying any additional information. So how can this be applied to some of the real-world problems that are challenging society today?
One area where zero-knowledge architecture is especially applicable is the realm of digital identity. With people using their phones and other devices more and more to interact online, verifying digital identities is now crucial to allowing consumers to access online services in a secure manner. Until recently, our online identities were managed in a similar fashion to how our offline identities are—by leveraging a trove of personal information such as names, addresses, social security numbers, passwords, etc. There are three key problems with this model:
Most digital identity experts agree that our online identities cannot and should not continue to be managed using this “old” non-secure way of doing things. So what should the “new” way be?
Passive identity authentication, which analyzes secure, dynamic signals instead of relying on static information, is being adopted by more and more forward-thinking Fortune 500 companies. True to its name, this type of technology often removes the need for the consumer to take any action, and instead uses signals from their mobile or other device to instantly complete the authentication. Removing the consumer from the process not only takes away opportunities for fraudsters, but also makes things easier and more frictionless for users.
But what about privacy? In the past, concerns have been raised about how passive authentication companies leverage dynamic signals. Oftentimes, these signals come from authoritative sources, known as Identity Verifiers, such as mobile network operators or banks. The main concern around this model is that the Identity Verifiers must often pass the signals outside of their systems to the company that is doing the passive authentication. This leads to a question of whether the signals are indeed secure and private, or whether they can be intercepted during that transfer.
The solution to this problem lies in the fact that the company that is asking for the results of the identity verification (a.k.a. the Relying Party) really only needs a ‘Yes’ or ‘No’ answer. Is this really my customer trying to interact with me, or someone else? Does this customer meet my criteria or not? They don’t need to know any personal information about the customer beyond what is minimally required, and because of privacy, they shouldn’t want to. This is a real-world scenario where less knowledge is desired: the perfect application for zero-knowledge.
So going back to the example with Maya who is purchasing wine online, with zero-knowledge architecture, a green ‘Yes’ signal, indicating that Maya is old enough to purchase wine, will be sent to the wine site. The only information the wine shop will know is that she is 21 or older; her real age will never be revealed.
Payfone has been using a Zero-Knowledge framework for our clients (who are Relying Parties) since 2015. By employing zero-knowledge, we are able to answer our clients’ question of whether their customers are who they say they are with either a Y/N answer or a score, and without having to pass additional and unnecessary attributes that could compromise our clients’ commitment to ’ consumer data privacy.
Earlier this month, we announced that we are now extending our Zero-Knowledge architecture to Identity Verifiers and Service Providers (the companies that provide the dynamic signals that we analyze to decision on identity). Identity Verifiers (such as mobile network operators) who are serious about protecting their customers’ data privacy can adopt our Zero-Knowledge framework to continue to participate in doing their part to safeguard customers against fraud while minimizing the amount of information that needs to be passed outside of their walls to do so. This also mitigates the risk of data leakage.
The consumer benefit of Zero-Knowledge is that it minimizes the need to pass personal information about a person in order to verify their identity for security purposes. That means a more secure and convenient digital customer experience that is also more private.
Relying Parties can benefit by getting the answers they need to protect their customers and companies against fraud, without opening themselves up to additional data breach risks or exposure.
Identity Verifiers can benefit by continuing to participate in thwarting fraud by allowing passive authentication companies to leverage their signals, without having to worry about exposing their customers to data privacy risks.
NEW YORK (March 1, 2019) – Payfone, the world’s leading digital identity authentication network dedicated to bringing Trust to the digital world based on their consumer-first Bill of Trust, announces that it has expanded its digital identity verification coverage to 90% of U.S. adults for all active mobile, fixed and non-fixed VoIP and landlines.* Additionally, Payfone is extending its Zero-Knowledge architecture, a privacy safe haven first introduced in 2015, to now include Authoritative Identity Verification partners, such as mobile network operators and financial institutions.
These two milestones represent major developments in the identity authentication leader’s strategy to harmonize trust, privacy and consumer experience in the digital world, and extend these benefits across the United States. This expanded reach means that Payfone can extend its KYC/AML identity verification and fraud prevention solutions to even more people, which is critical as more and more consumers rely on mobile devices as their primary form of interacting with businesses and each other.
“Over the past few years, Payfone’s commitment to fraud prevention has led us to focus on bringing these benefits to all individuals in the U.S., including the underbanked. Digital KYC and AML services need to be available to all, including those with pre-paid phones, those who are on family plans, and even those with small business and corporate phones,” said Rodger Desai, CEO and Co-Founder of Payfone. “As we continue the journey in 2019, we plan to expand our reach by adding coverage for lifeline phones, hybrid WiFi-Cellular plans, as well as eSIM.”
In addition to expanding coverage, the sharing of Payfone’s Zero-Knowledge architecture raises the bar for consumer data privacy for the entire industry. Zero-Knowledge architecture enables a Relying Party to verify a claim, such as age, through Payfone without personal information being passed back, stored, or aggregated.
“We have been using Zero-Knowledge for our customers (Relying Parties) since 2015,” explained Desai. “Now we are extending our Zero-Knowledge architecture to Service Providers and Authoritative Identity Verification partners to accelerate the modernization of the industry’s ecosystem. Thwarting fraud does not need to come at the expense of data privacy.”
“The telecom industry and American public are currently plagued by robocalls, SS7 attacks, SIM swap scams and porting fraud,” said Michelle Wheeler, Payfone SVP of Industry Relations and CTIA board member. “Solutions like this, which allow consumers to participate in the digital economy without fear of getting scammed or worrying about their data privacy being compromised, are welcomed news for the industry.”
*Based on independent third-party data studies with Fortune 500 companies in the fields of Financial Services, Healthcare, Insurance and Retail.
Payfone’s mission is to bring Trust to the digital world and enable enterprises and their customers to enjoy experiences that are fast, frictionless and fraud-free. Payfone’s award-winning Trust Platform™ and Trust Score™ give enterprises the power to give their customers safer and better digital experiences by issuing real-time Trust Scores. Our zero-knowledge Trust Platform™ orchestrates the verification of identity claims with an ecosystem of authoritative partners within a privacy-first framework. Payfone provides digital authentication services for 6 of the top 10 financial institutions, and leading healthcare, insurance, technology and retail companies. Learn more at www.payfone.com and linkedin.com/company/payfone.
Payfone’s CEO and Founder Rodger Desai recently sat down with David Birch, Director at electronic transactions consultancy Consult Hyperion, to answer the ‘tough’ questions about industry challenges and how Payfone’s ‘call to arms’ regarding Zero-Knowledge can really impact the digital world.
Desai: Yes, these interests can co-exist; in fact, in our view, they must. Security and the desire for convenience should not override privacy, but you can’t have privacy without security. And since laws and regulations lag technology, GDPR and CCPA may not capture the full scope of the privacy protections consumers require. It comes down to having a strong set of principles that guide how products are built and used. Payfone’s Bill of Trust is our set of principles that we use to guide our actions that go beyond what may be required by regulators today.
Desai: Our view is that even with compliance obligations such as KYC/AML, GLBA exceptions and the GDPR’s notion of Legitimate Interest, consumers expect to always be informed, have the collection of their personal information limited to only what is minimally required, and their consent collected.
Desai: No, that is a common thought every time technology advances. Privacy is a constant renegotiation of the boundaries between individuals and society. History has shown that if society overreaches, innovation and personal rights suffer.
Desai: We think Zero-Knowledge is key to the way businesses will work with each other in digital. Gone are the days where the industry needs to aggregate personal data and somehow protect it. Our mission is to accelerate the digital economy to a world where privacy is not compromised, while protecting from fraud and cyber-threats. Service Providers such as mobile operators and financial institutions play a critical role in the ecosystem, and Zero-Knowledge can allow them to participate safely.
Desai: Yes. While we have never used mobile operator location data at Payfone, there are important and legitimate cases where location can help protect consumers. If a bank would like to ask if a customer’s phone is in the city where an unusual transaction is taking place, then the bank, with consumer consent, can ask a Service Provider if the phone is in that city. The answer should be yes or no, and the actual city the consumer is in should not be returned or revealed. That’s Zero-Knowledge.
Desai: As we just announced today, due to the sophistication of our platform and our focus on redundancy and inclusion, we have many authoritative identity verification partners. We cover 90% of U.S. adults across mobile, VoIP and landline, even pre-paid, family plans, and businesses. Additionally, since we tap into core telecom infrastructure, the way the mobile operators themselves do, we are less reliant on mobile operators directly.
Desai: Yes, especially with the need to thwart SS7 attacks, SIM swaps, robo calls and spoofed calls. These are among the top complaints the FCC receives from consumers. Mobile operators are adopting Zero-Knowledge protocols which will help prevent fraudulent activities, modernize their processes and protect their subscribers and customer data even further.
Desai: We have been on a journey to accelerate the industry to a world that fulfills our Bill of Trust. Today the focus is on expanding our coverage and Zero-Knowledge. Later this year we will introduce new tools for consumers to take control of aspects of their mobile identity. It’s time to create additional tools that accelerate self-sovereignty.