Published: 12/11/2024
EU digital ID wallet: 10 things to know
With eIDAS 2.0 being put in force on May 20, 2024, residents of the European Union can look forward to universally accepted digital identification wallets, issued by every member state of the EU, by 2026. While the benefits to users are clear, what does it mean to organizations that, as relying parties, will have to accept these as valid identification? What are the challenges, and where are the opportunities? Discover the 10 most important points you need to know about EUDI Wallets in this article.
The European Union issued an update to a 2014 regulation earlier this year that is poised to have far-reaching implications across identities, payments, and other related fields. The European Digital Identity Regulation (Regulation [EU] 2024/1183), also known as eIDAS 2.0, was published in the Official Journal of the European Union, the EU’s official gazette of record, on April 30, 2024. It entered into force on May 20, 2024.1
A new Identity paradigm for the EU
The regulation it updates (eIDAS) laid the bedrock for establishing electronic identification and trust services for electronic transactions in the EU’s internal market. The EU recognizes that demand for those services will only grow stronger as digitalization of every part of society increases. Relatedly, it also recognizes that digital offerings from governments under the old regulation had a few shortcomings. Among others:
- They were not available to everyone
- They were often limited to public services
- They did not allow for seamless cross-border access2
Hence, the EU has introduced and brought into effect the eIDAS 2.0. EUDI-Wallets are a response to the challenges of digital identification, enabling secure online handling of administrative processes or private sector transactions. Every EU Member State must offer its own wallet app, built to the same specifications, to all citizens, residents and businesses within the next two years. Each version of the wallet will be interoperable and will work wherever you are in Europe.3
But time is of the essence: There is a to-do list for every Eu member state, and for every entity that requires an EU resident to identify themselves. In case you’re wondering what that means in simple terms, here’s our explainer for what to expect from eIDAS 2.0, how you need to prepare yourself (and your business) for it, and where the opportunities will lie as the EU digital ID ecosystem expands.
What you need to know about the new EUDI Wallet
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The clock is ticking
All EU member states (and European Economic Area states) are currently mandated to offer at least one European digital ID wallet (EUDI wallet) to their citizens within 24 months of the implementation of the act, i.e., May 20, 2024. This requires attention, because …
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These ID wallets must be accepted
Private (and other) providers in 12 identified service areas – including banking, telecom, health, and digital infrastructure – will have to accept these wallets as proof of identification. These relying parties will be part of the ecosystem the new wallets are designed to enable.
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One wallet accepted across the EU
These wallets will make the lives of end users much easier. Identity credentials issued and stored in the national wallet in Iceland are valid as proof of identity in Spain. Anyone who has opened a bank account in a foreign country will heave a sigh of relief. In theory, everything you need will be literally at your fingertips, on your device.
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An opportunity for private-sector wallet issuers
It could be the case that the user experience of these government-issued wallets lags behind what a customer may take for granted from the private wallets they already use to manage other aspects of their lives. Thus, there is every likelihood there will be opportunities for private-sector issuers to provide enhanced user experiences that are more in keeping with what customers expect these days.
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Security by design
Convenience for users will be matched with a focus on privacy and security by design. Consent, data privacy, and data minimization are built into the specifications for these new wallets. Hence, users can rest assured that their legitimate concerns are being looked after. However, this stringent attention to security comes with challenges for other players in the ecosystem.
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Compliance: demanding and crucial
In order to partake of the ecosystem the EUDI wallets will enable, relying parties such as banks, fintechs, insurance companies and the like will have to undergo stringent compliance with regulations regarding security and data privacy. This requires investment, strategic planning, and deep knowledge of the regulations themselves.
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Uses beyond identification
The current scope of these wallets is limited to identification and verification (including digital signatures). However, this will change in the future to encompass payments and other use cases already demonstrated by wallets in other areas. The current scope of these wallets is being tested in different large-scale pilot projects, with different companies and service providers assessing various use cases to know more about how they may develop, and what legal frameworks are necessary to support them.
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More really means more
A unified regulatory framework for identification would offer banks enormous opportunities in their KYC (Know Your Customer) process. For acquiring new customers, banks could largely rely on the verification features of the EUDI Wallet, thereby saving costs associated with labor-intensive video identification procedures. In the future, the EUDI Wallet could additionally take over one or all of the functions currently fulfilled by other digital apps or wallets.
For individuals, it could enable the authorization or receipt of payments, similar to the functionality of a bank wallet today. Students could exchange documents with their universities and digitally share their certified diplomas with potential employers. Patients would be able to store their health data in the EUDI Wallet and share it with various doctors.
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Every member state will issue its own wallet
There may be situations where interoperability (among other issues) will be a challenge. The standards are stringent, but there will be lots of different systems and back ends involved. This will have to be built into the way your organization plans for the transition to the EUDI wallet ecosystem.
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Find the right partner
To enable service providers to adopt EUDI Wallets, an orchestration layer can be provided to reduce complexity. Such a layer bridges the various identity systems and ensures that the security level of the personal identification data (PID) in the digital wallet is maintained as it is transferred from the source to the service provider's Customer Identity and Access Management (CIAM). This enhances security and makes the process accessible for audits. Support from a partner with extensive experience and expertise in SecurityTech plays a crucial role in achieving this.
Giesecke+Devrient has a global presence – and a history of innovation across currency technology, financial platforms, and digital security, which is where the EUDI wallet’s ecosystem is being developed. With its expertise in issuing, managing, and securing digital identities, G+D and its subsidiary Veridos are well placed to be your partner as you navigate toward the imminent arrival of the EUDI wallets and their attendant ecosystems.
Key takeaways
- EUDI wallets will have to be offered by EU member states to their citizens within two years of the implementation of eIDAS 2.0, i.e. May 20, 2024.
- EUDI wallets will have to be accepted by private service providers in 12 designated service areas, including banking, energy, transport, digital infrastructure, health, and education.
- Not only do companies need to pivot to the ecosystem to come – their internal processes also have to be compliant with the privacy (and other) requirements of the new regulation.
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