Due to their seamless user experience and secure design, payment terminals have become the gold standard for brick & mortar merchants. As the world becomes more digital, merchants need to embrace new and innovative ways to keep up with evolving consumer expectations while maintaining, or even improving, security.
One key digital advancement is digital identity which has quickly become a cornerstone of multiple industries including retail, healthcare, transportation and more. Terminal vendors therefore face a strategic choice: Stick to payments, or evolve into access points for identity too?
Why this matters now
Digital identity is a virtual representation of the user. It securely stores and presents personal information, which can be used to verify the identity of the user anywhere, anytime. By passing this verification process, users can gain access to services, without needing to provide a physical identity document.
Digital identity is a trend, driven by convenience, fraud prevention, data privacy and security. Standards are already in place and are being followed closely by technology vendors. Acceptance must follow, now that digital identity is becoming available to many users.
Due to its convenience, governments and schemes are launching digital identity systems. Examples include Singpass Mobile App in Singapore, Aadhaar in India with over 1.3 billion registered citizens, and the United States of America’s Mobile Driver License (mDL).
Digital ID isn’t just about online services. Citizens can also use them to verify themselves physically. For instance: in pharmacies, when collecting a parcel or at a government help desk. But these places have not yet deployed payment terminals and there’s no common de facto interface for that.
The power of payment terminals.
With security chips, authentication capabilities, and a place on every retail counter, terminals are already built for trust. Vendors that move early can help shape the role of identity at the physical edge — and become indispensable to this next layer of infrastructure.
Payments and identity: naturally aligned.
The payments and digital identity ecosystems already share key components of critical infrastructure, which makes them compatible and able to support overlapping use cases. Both systems rely on cryptography and secure hardware – components that are already embedded in payment terminals. These elements are essential for securely storing cryptographic keys and executing sensitive operations.
Both ecosystems also utilize similar user interfaces and input methods. Whether it’s a PIN pad, a touchscreen on a POS terminal, or a biometric scanner used for identity verification, the technology used to interact with users is easily adaptable between the two domains.
Standards and certification frameworks also provide a strong foundation for integration. For example, global standards such as EMVCo for payments and FIDO Alliance for identity authentication help ensure interoperability and security across different devices.
Finally, both ecosystems are built on trust relationships between the key stakeholders, banks, acquirers, and service providers in the payment’s world. These relationships are critical for ensuring that transactions and identity verifications are accepted across networks and ecosystems. Institutions that already support secure payment acceptance are well-positioned to extend their role into digital identity verification.
This overlap makes the payment terminal a natural candidate for identity authentication at the edge, especially for services that require face-to-face verification or hybrid customer journeys where digital and physical interactions are blended.
A new market, not just a new feature.
Digital identity does not just expand what terminals can do — it also expands where they can go. By entering non-payment environments through identity use cases, terminal vendors could open doors in entirely new markets, including public sector offices, healthcare providers, or access-controlled locations. Once deployed, these terminals may later enable payments too, making identity a strategic wedge into previously untapped areas.
Terminal vendors must be ready for market threats, such as technology players that are already enabling terminals, new players and mobile vendors.
It’s also important to remain open minded to upcoming opportunities, like helping to shape new infrastructures, incorporating new payment requirements, participating in new types of payment initiation and defining new use cases and services.
The risk of standing still.
While terminal innovation has focused on sleek form factors and value-added apps, few vendors have strategically explored how digital identity can reshape their market.
By not engaging early, vendors risk:
Becoming sidelined as mobile-first ID platforms set the standards.
Allowing newcomers to enter the ID market and later capture payment market share.
Missing opportunities to influence national and regional schemes.
Losing relevance in ecosystems that increasingly value multi-function interfaces.
The integration of identity into terminals is no longer a technical challenge – it’s a strategic imperative.
The opportunity for first movers.
There is a growing space for vendors who can demonstrate how digital identity and payments converge on a single device.
Some key use cases are already emerging:
Age verification in retail or hospitality — a fast-growing use case in the EU, US, and across APAC. For example, in Australia, regulation for age verification with digital identity when buying liquor is already in place.
Prescription collection in pharmacies — where identity verification and payment occur together and a unified experience could improve efficiency and the customer journey in-store.
Subsidies or tax refunds at the point of sale — where proof of entitlement and transactions converge.
Transit discounts and concessions — enabling the system to verify eligibility without tracking individuals directly.
These use cases are not theoretical. In several markets, pilots are already underway, often without terminal vendors in the room. Some of these pilots involve two separate terminals, one for payments and one for digital identity, opening space for newcomers to bring solutions not yet explored by traditional terminal vendors.
Terminal vendors are in a unique position.
Terminal vendors are well-placed to support both payment and digital identity use cases due to their expertise. Their devices are already embedded in the payment flow, which allows them to seamlessly optimize the user experience by unifying identity verification and transactions. Because these terminals are already integrated with retail sales systems, they offer a natural extension point for identity-based workflows without requiring duplication of infrastructure.
Additionally, terminals come with built-in user interfaces and authentication mechanisms like touchscreens or PIN entry pads, the devices are already trusted and deployed at scale and vendors are already familiar with certification, compliance and standards processes. Finally, vendors already have strong, established relationships with acquirers.
These strengths position vendors perfectly to bridge the physical and digital identity worlds.
The bottom line.
Payment terminals don’t have to be limited to payment transactions. In a digital-first world, they can become trusted touchpoints for identity, but only if terminal vendors act now.
The opportunity is there. Whether you seize it, or let others redefine the edge of identity, is up to you.
Terminal vendors thinking about digital identity should consider six strategic questions:
Which identity roles could your terminals support? (credential verification, authentication)
What standards are relevant? (ISO 18013 mDL/mDoc, W3C VC)
Can you integrate identity (UX and technology) with minimal redesign?
What partnerships will help you scale fast?
Where are the first viable pilots?
What are you doing to be compliant with new regulations for all regions?
By adopting digital identity solutions, payment terminal vendors can seize opportunity and build stronger relationships with customers. Contact Fime if you’re interested in gaining a competitive edge in this ever-changing market.
