The European division of the Linux Foundation has launched the OpenWallet Foundation (OWF), which aims to facilitate interoperability between digital wallets by means of open-source software. This launch follows the Linux Foundation’s announcement five months earlier that it planned to establish the OWF, which will now be housed under the Linux Foundation Europe.
The OWF is a consortium of companies and non-profit organizations collaborating to drive global adoption of open, secure and interoperable digital wallet solutions as well as providing access to expertise and advice through our Government Advisory Council.
The OWF aims to set best practices for digital wallet technology through collaboration on standards-based OSS components that issuers, wallet providers and relying parties can use to bootstrap implementations that preserve user choice, security and privacy.
OpenWallet
Organizations desire comparable flexibility for digital wallets, and they seek open-source software that allows them to build modular components collaboratively.
- They want digital wallets to provide the same level of flexibility as physical wallets, where customers can select from a variety of brands and options.
- To be successful, organizations believe they must offer multi-purpose capabilities and support interoperability.
- However, few organizations have the resources to address all use cases and requirements while also ensuring flexibility, choice, and interoperability.
- While many standards exist, there is a shortage of open-source software components that can be utilized to develop and distribute digital wallets.
Digital wallets are no longer limited to financial transactions, as they are increasingly being used to store various virtual items, such as student IDs and driving licenses, with the rise of technologies such as the metaverse and crypto. However, current digital wallets do not typically integrate with each other, creating a need for an open-source engine like the one the OWF intends to develop.
The OWF will not build its own digital wallet or establish new standards, but rather provide the underlying technology for third parties to use. The OWF’s main selling point is that it can help companies avoid vendor lock-in, and a new report by the OWF and Linux Foundation emphasizes the need for a more open digital wallet ecosystem, given that the total value of all digital wallet transactions was $15.9 trillion in 2021. The OWF was initially developed by Daniel Goldscheider, CEO of open banking startup Yes.com, and integrated into the Linux Foundation.
India and it’s DigiLocker
India has seen a remarkable surge in the adoption of digital technologies, particularly in the areas of digital payments and document storage, the DigiLocker platform has revolutionized the way Indians store and access important documents such as driving licenses, education certificates, and Aadhaar cards.
DigiLocker provides a secure and convenient way to store and share these documents digitally, eliminating the need for physical copies and reducing the risk of loss or damage.
Security and Challenges
Although OpenWalllet will need more resilient than digilocker because unlike digilocker, OpenWallet focus is on financial and related data. One of the primary security challenges of open wallets is the risk of vulnerabilities in the code. Since the code is openly available, it may be vulnerable to exploitation by attackers, who may find and exploit vulnerabilities for malicious purposes. To mitigate this risk, developers of open wallets must follow best practices in code development, including rigorous testing, peer review, and ongoing security audits.
Another security challenge of open wallets is the risk of fraud and scams. Open wallets are vulnerable to phishing attacks, social engineering, and other types of fraud, which can result in the loss of digital assets. To prevent such attacks, users must follow best practices in digital security, such as using strong passwords, enabling two-factor authentication, and avoiding suspicious emails and links.
Finally, open wallets may also face regulatory challenges, particularly in countries with strict financial regulations. Governments may require open wallets to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations, which can pose challenges for open-source development and user privacy.
Overall, while open wallets offer many benefits, they also pose unique security challenges that must be addressed through best practices in development, user education, and regulatory compliance.
