Payment terminals will soon validate digital IDs as Cuscal Paymark upgrades system

“That means we’re enabling merchants to be able to make it useful or accept the ID. In practice, we’re working with the payment terminals that are already sitting on counters all around the country. What we’re doing is adding ID as a capability within that payment terminal,” Littlewood said.

Littlewood explained the service would sit alongside payments, allowing users to verify their credentials in a similar fashion to contactless payments.

She explained that, just like payments, there is a record of an interaction, but no information is shared other than confirmation the credentials are accurate.

Demonstrating how the technology works, Cuscal offered the example of a customer in a bar venue ordering an alcoholic beverage.

The customer orders the item and is prompted by the payment terminal to verify their identification.

Upon tapping their device on the contactless area, the customer must use some form of biometric lock on their device to confirm they are consenting to the process, before the merchant is prompted to verify their credentials using the customer’s photo and credentials.

Once their credentials are confirmed by the merchant, the terminal proceeds to payment.

Cuscal Paymark chief executive Mike Blomfield said the technology acted as the “conduit” between merchants and users.

“If you want to make that connection, the worst way to do it is to require a whole set of new devices and capabilities. You’ve got to find a way to ask what is in existence and how do we exploit the fact that it exists positively,” Blomfield said.

“A payment terminal’s perfect, right, because they’re everywhere. What we’re trying to do is make sure that it’s a very natural behaviour. The elegance of this will be the secret to, not so much ultimate uptake, but the speed of the uptake.”

Cuscal Paymark has been working on the infrastructure to support the technology for two to three years. Littlewood said more than $1 million had been invested over that period.

The work required industry collaboration to bring it to life, with Littlewood confirming they had timed investment to align with identity providers, legislation, legal certifications and the retailers at the centre.

The technology arrives as uptake internationally continues to grow, with 75% of qualifying adults in the United States now accessing some form of digital ID.

There are wider implications for digital IDs in protecting personal information, strengthening compliance tracking for businesses, preventing fraud and bringing identity verification and payments together in one seamless transaction for consumers and businesses.

Blomfield said in an ideal world all forms of credential would be non-physical, tokenised, digital and biometrically protected, as this raises the bar on consumer protections.

He said the rollout, expected to begin in March 2027, would mean travellers from overseas could seamlessly interact with merchants in New Zealand without the need for physical identification like passports.

Littlewood said while digital IDs would be available, they were voluntary.

“The way that we’re doing it in New Zealand reflects New Zealand society. You can still pull out your plastic ID, you can still pull out cash. That is all going to continue to exist. People will choose the ID that suits them for whatever purpose, and it’s happening in different ways for different parts of the community.

“I think it comes down to utility. The first time someone leaves the house without their driver’s licence and wants to buy a bottle of wine on the way home, they might download it to see how it goes. I think they’ll see that it’s the absolute minimum data required to get access and to be legal for the product they buy.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.