Claire Deprez Pipon and Marie Austenaa delve into the European Digital Identity Framework, emphasising the European Wallet Consortium’s exploration of payment and digital identity convergence.
The article also highlights key insights gathered from the consortium.
The landscape of digital identity is rapidly evolving, driven by regulations aimed at enhancing security and interoperability. In 2014, the European Commission introduced the Electronic Identification, Authentication and Trust Services, eIDAS, regulation. This initial framework aimed to foster secure digital interactions across EU borders. A subsequent version of this regulation – The European Digital Identity Framework – has been launched, focusing on increasing interoperability in digital identities. By the end of 2026, all EU Member States will be mandated to provide European Digital Identity Wallets to their citizens, transforming how individuals interact with digital services.
The European Digital Identity Wallets (EUDIW) are designed to facilitate various use cases, ranging from opening a bank account to traveling across borders. These wallets will serve as essential tools for citizens to validate their identities for various purposes, including Strong Consumer Authentication (SCA) for online payments. Additionally, they could hold payment credentials, initiate transactions online and in-store, and combine identity attributes with payment information to confirm eligibility.
The European Wallet Consortium was 1 of 4 consortia selected and funded by the European Commission to explore wallet use cases. EWC focuses on travel, payment use cases, and organisational digital identity. This consortium comprises several key companies, including Visa, which leads the payment taskforce, and Worldline, which contributes with its payment expertise.
Travel, organisational identity & payments
The EWC is working on three different scopes with various objectives:
The objective in the travel sector includes reducing friction in the industry through the application of EUDIW, focusing on use cases such as managing advanced passenger information, digital travel credentials for border crossings, and guest registration in hotels.
For organisational identity, the aim is to streamline cross-border identity proofing for businesses in areas like procurements, e-receipts, and verification of essential attributes necessary for conducting business (both domestically and internationally).
In the payment sector, the EWC seeks to promote the everyday usage of the EUDI Wallet for payment authentication and initiation.
Payment and digital identity
EWC’s Payment and digital identity cross-industry task force is exploring barriers and enablers to scale adoption and acceptance of the EUDI Wallet in payment. Payment is a key use case to drive the adoption of the EUDI Wallets and banks will have to propose to their customers the EUDI Wallet as an alternative SCA method by online payment by the end of 2027.
Within the realm of payments, the EWC is investigating key use cases:
Payment authentication: utilising the EUDI Wallet as an alternative method for Strong Customer Authentication (SCA) in online transactions. This approach satisfies regulatory obligations while enhancing user experience. Two variations have been identified:
‘bank-led SCA’: in this variant, the merchant initiates the authentication conversation like today. The payer’s bank issuer, however, invokes the user’s EUDI wallet for step-up authentication. The wallet thus acts like a drop-in replacement for existing authentication methods.
‘Merchant-captured SCA’: in this variant, it is the merchant requesting authentication data from the wallet prior to starting the authentication conversation. This data is forwarded to the payer’s bank for validation.
Payment Initiation: the wallet will allow users to hold payment credentials (card or account tokens) and initiate payments with ease, whether in-store or online for ecommerce. The goal is to promote an experience where the one-click step is enough to authenticate, validate the necessary identity attributes, and process the payment. You can find dedicated demonstrations here: Worldline Global | Use cases for Digital Identity Hub. This capability will significantly reduce friction during transactions.
While the potential of the European Digital Identity Wallets is promising, several challenges and benefits will potentially arise during their implementation.
Challenges:
Need to get the technology standards right and completed – including industry-specific standards and the ability to leverage existing infrastructure.
Risk of continued national fragmentation as build and certification are national responsibilities.
Commercial models are still vague – but entities who own (information) assets are well positioned in principle.
Regulatory and legal alignment – e.g. avoiding outsourcing when relying on the EUDI wallet for SCA – including for merchant-captured SCA.
Opportunities:
The significant installed base of interoperable and trusted EUDI wallets available to rely on – investments done by others.
EUDI wallet brings potential new use cases – a wider choice of wallets for payment, flexibility in payment authentication (i.e. merchant-captured authentication), pay and confirm identity attributes, and digital proofs such as proof of income or proof of IBAN.
Business opportunities across the eco-system created through eIDAS by lowering costs or introducing new business opportunities.
eIDAS, EUDI wallet, and the ARF are overcoming industry ‘commitment phobia’: Wallets and Verifiable Credentials are part of the future for digital transformation.
The European Digital Identity Framework represents a significant leap towards a secure, interoperable digital landscape. Guided by initiatives from the European Wallet Consortium, the framework aims to enhance the way individuals engage with digital services across Europe. As the rollout progresses, it is crucial for stakeholders to tackle challenges while maximising the benefits of improved secure and streamlined transactions.
* The EU Digital Identity Wallet Consortium (EWC) is a consortium co-financed by the European Union, tasked with conducting large-scale pilots to test and demonstrate the effectiveness of the EU Digital Identity Wallet for the travel use case, organisational digital identity, and payment. With members from across Europe, the EWC is at the forefront of developing innovative solutions to enhance digital identity verification and utilisation across the continent.
About Claire Deprez Pipon
Claire is responsible for the product management of Strong Customer Authentication and Security solutions such as Trusted Authentication and Digital Security Suite within Worldline. With advanced payments technology, local expertise, and solutions customised for hundreds of markets and industries, Worldline powers the growth of over one million businesses worldwide.
About Marie Austenaa
Marie Austenaa leads Digital Identity in Europe for Visa. She has been working in digital identity since 2014, when she led GSMA’s global programme on Digital Identity for mobile operators around the world and later at Signicat – one of the leading digital identity service providers in Europe. Marie currently serves as the Board Chair for the Open Wallet Foundation (Linux Foundation). Marie was selected for Okta25 Digital Identity Innovators for 2024.
About Worldline
Worldline [Euronext: WLN] helps businesses of all shapes and sizes to accelerate their growth journey – quickly, simply, and securely. With advanced payments technology, local expertise, and solutions customised for hundreds of markets and industries, Worldline powers the growth of over one million businesses around the world. Worldline generated a 4.6 billion euros revenue in 2023.
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