Online technology has transformed how people pay and utilise various services; payment methods that are mobile, fast, efficient, and secure have become basic needs. However the current usage of digital identity implementation in payment services faces several data vulnerability. Therefore, a revolution in digital identity is needed, such as utilizing the blockchain-based digital identity. However, literature in blockchain-based digital identity specifically used for the government’s payment ecosystem is still limited. Most blockchain research in the financial field focuses on the transactional part and mostly researching the technology on how it can enable the self-sovereign identity. None have discussed how blockchain-based digital identity can impact the payment system and examine its socio-technical changes within the ecosystem. Therefore, this study aims to fill the gap before governments can implement the technology by identifying the suitable type of blockchain architecture for the payment ecosystem, its impact on the current payment ecosystem and stakeholders, and finally, how the system will be governed. The case study of this research based on the perspective of Indonesia because of its growth in digital payment ecosystem. This research contributes in identifying high-level requirements to develop a blockchain-based digital identity based on the needs of the relevant actors and the scope of the payment ecosystem. Furthermore, this study reflects that implementing a blockchain-based identity in an established ecosystem is a complex task, not merely an IT project but also a change in the whole ecosystem. This study is expected to assist policymakers, regulators and the public regarding the potential advantages and challenges of using a blockchain-based digital identity.