The EU Digital Identity Wallet Explained [Video + Takeaways]

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The European Digital Identity Wallet (EUDI Wallet) is set to transform how people verify their identity and access services across borders. Expectations are high, with promises of seamless onboarding, payments, and credential sharing. But while the vision is ambitious, we're still in the early stages of development.

In our recent live event, Esther Makaay (VP of Digital Identity at Signicat) gave a presentation covering EUDI Wallet use cases, the evolving wallet ecosystem, large-scale pilots (LSPs), industry implications, and mandatory acceptance by regulated industries. She also addressed the gap between expectations and reality, highlighting both opportunities and ongoing developments.

This article summarizes the key takeaways, offering a clear snapshot of where we are today and what’s next for the EUDI Wallet.

The Evolution of Digital Identity in Europe

• Early Digital ID Landscape
  
  • European digital identities (eIDs) started around 2000.
  • Early adoption driven by government and banking sectors.
  • eIDAS (Electronic Identification, Authentication, and Trust Services) regulation in 2014 gave a significant push to digital ID adoption.
• Current eID Adoption Rates in Europe (2024-2025)
  
  • High eID usage rate (85-100%)
    
    • Finland (98%)
    • Norway (97%)
    • Netherlands (94%)
    • Denmark (90%)
    • Sweden (90%)
  • Medium eID usage rate (60-84%)
    
    • Estonia (84%)
    • France (79%)
    • Belgium (77%)
    • Latvia (70%)
    • Poland (67%)
    • Lithuania (60%)
  • Low eID usage rate (0-59%)
    
    • Italy (56%)
    • Spain (54%)
    • Austria (49%)
    • Germany (22%)
• Challenges in Digital ID Adoption
  
  • Varied levels of eID adoption across Europe, with Northern Europe leading adoption rates while Germany, Spain, and Austria lag behind.
  • Example: Despite being a digitally mature country, Germany has only 22% eID adoption due to usability barriers.
  • Adoption is affected by factors such as mandatory registration processes, usability of national eID schemes, and private sector integration.

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The EU Digital Identity Wallet (EUDI Wallet)

• Core Concept
  
  • Member states must issue a digital identity wallet to all citizens.
  • Wallets will be government-certified and linked to national eIDs.
  • Free to use (though the extent of "free" is still debated).
  • Expected launch: December 2026.
• Key Features
  
  • Cross-border usability in both public and private sectors.
  • Secure storage of identity and verified attributes.
  • High-assurance government-issued credentials.
  • Expansion beyond identity:
    
    • Driving licenses.
    • Diplomas and educational credentials.
    • Payment cards.
    • Travel documents and boarding passes.
• Regulatory Framework
  
  • Governed by the eIDAS regulation.
  • Requires mandatory acceptance of wallets by regulated industries by December 2027.
  • Extensive lower-level legislation (implementing acts) will define specifics.

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The Wallet Ecosystem and Governance

Regulatory and Certification Challenges

• Every wallet must be certified at the national level.
• Wallet certification is tied to identity issuance and onboarding, making interoperability complex.
• The Architecture Reference Framework (ARF) provides guidance but is not legally binding.

Implementing Acts: Key Legal Framework for EUDI Wallets

• Implementing acts provide detailed regulations to operationalize the EUDI Wallet.
• Published in three batches:
  
  • First Batch (November 2024) – Covers certification, core functionalities, person identification data, and electronic attestations.
  • Second Batch (March 2025) – Focuses on cross-border identity matching, verification of attestations, security breaches, and wallet certification.
  • Third Batch (May 2025) – Introduces electronic archiving, remote qualified signature management, and advanced electronic signature validation.
• Implementing Acts will be updated annually, as new standards (such as those from ETSI) become available.

Reference Implementation Wallet

• An open-source wallet developed for member states with limited technical capabilities.
• Governments can rebrand and customize it.
• Managed via a GitHub repository with frequent updates.

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Large-Scale Pilots (LSPs) and Their Role

Key Findings from Pilots

• Identity verification combined with payments reduces fraud by 90-95%.
• Organizational identity is complex and country-specific.
• Legal frameworks need harmonization to ensure interoperability.

Current Large-Scale Pilots (LSPs) (Ending in Mid/Late 2025)

Funded initiatives designed to test the real-world implementation of EUDI Wallets across various sectors.

• European Identity Wallet Consortium (EWC)
  
  • Website
  • Focus: Travel, payments, and organizational identity.
  • Includes a large number of private sector participants.
• Potential Consortium
  
  • Website
  • Focus: Diverse use cases, including driving licenses and e-government services.
  • Includes most EU governments.
• NOBID Consortium
  
  • Website
  • Focus: Payments sector.
  • Led by Nordic, Baltic, and Italian governments.
• DC4EU Consortium
  
  • Website
  • Focus: Education and social mobility.
  • Involves governments and the educational sector.

Upcoming Large-Scale Pilots (Starting Mid-2025)

Two new pilots are scheduled to begin in mid-2025 to expand the scope of wallet adoption.

• WE Build Consortium (WBC)
  
  • Website
  • Led by KVK NL (Dutch Chamber of Commerce), supported by the Dutch Ministry of Economic Affairs.
  • Co-led by Bolagsverket (Sweden).
  • Focus: Organizational identity with three key use cases:
    
    • Business identity.
    • Supply chain identity.
    • Payments.
  • Will also cover natural persons and their interactions.
• Aptitude Consortium
  
  • Led by French governmental organizations.
  • Focus: Travel and payments.
• Grant Agreements
  
  • Expected to be signed in mid-April 2025, finalizing participation and funding.

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Industry Implications

Payments

• Combining identity verification with payments significantly reduces fraud (by 90-95% in early pilots).
• However, liability remains unclear – if an identity credential is incorrect or compromised, who is responsible?
• AML and KYC regulations require more than just identity verification, including fraud detection and ongoing monitoring.

Travel

• Government border control is a closed ecosystem, making integration challenging.
• The primary goal is data sharing without typos, particularly for self-asserted identity details (e.g., entering passport details manually can lead to errors that prevent boarding).
• Example: First successful ferry ticket purchase and boarding via an eID Wallet (from Greece to Romania).

Organizational Identity (B2B Focus)

• B2B use cases could be larger than payments, especially for data access and secure data-sharing.
• Governments currently struggle to understand and define organizational identity, as legal entities differ across EU member states.
• Example: Business supply chain and payments pilots are exploring how identity verification can enhance security and efficiency.

Governmental Use Cases

• Primary driver of EUDI Wallet adoption, as governments must issue wallets and provide core identity data.
• Main use cases include:
  
  • Personal Identity Data (PID)
  • Mobile Driving License (mDL) integration
  • Access to government services
• Governments will likely expand the ecosystem by integrating additional government-verified attributes into the wallet.

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Business Considerations and Monetization Challenges

• Mandatory Acceptance for Regulated Industries
  
  • Industries with strong authentication requirements (banks, telecoms, government services) must accept wallets by 2027.
  • Non-compliance penalties unclear.
• Commercial Viability of Wallets
  
  • Wallets may become a commodity rather than a monetizable product.
  • Business value is in the ecosystem, not the wallet itself.
  • Private-sector wallet adoption remains uncertain.
• Opportunities for Businesses
  
  • Reduce customer onboarding costs by leveraging government-issued credentials.
  • Minimize document collection by using verifiable digital attributes.
  • Potential for business wallets to improve supply chain identity verification.

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Mandatory Acceptance for Regulated Industries

1. Who Must Accept EUDI Wallets?

• Regulated entities—any organization required by law (national or EU) to use strong authentication for their services.
• This includes banks, financial institutions, telecommunications providers, and other industries subject to EU authentication laws (e.g., PSD2 for payments, AML regulations for KYC).

2. What Does "Mandatory Acceptance" Mean?

• EUDI Wallets must be accepted as an authentication method where strong authentication is required.
• Organizations can continue using their existing authentication methods (e.g., internal systems, biometrics, legacy eID solutions).

3. Exemptions from Mandatory Acceptance

• Micro and small enterprises (as defined by the EU) are not required to integrate EUDI Wallets.
• Wallet-based verification is only required for authentication, not for identity proofing or other verification tasks.
  
  • This means KYC and other verification processes can still use existing document checks, databases, and third-party verification providers.

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Timelines and Key Milestones

• Regulatory and Implementation Timeline
  
  • May 2024 – eIDAS amendment comes into force
  • July 2024 – New call for Large-Scale Pilots (LSPs) opens
  • November 2024 – First batch of Implementing Acts published
  • March 2025 – Second batch of Implementing Acts published
  • May 2025 – Third batch of Implementing Acts published
  • Second Half (2H) of 2025 – Current LSPs conclude, new LSPs begin
  • December 2026 – Member States (MS) must provide at least one EUDI Wallet
    
    • European Economic Area (EEA) nations get an extra year (until December 2027).
  • December 2027 – Regulated industries must accept EUDI Wallets as a form of strong authentication
• Phases of the EUDI Wallet Rollout
  
  • 2024 – Legal groundwork laid, first Implementing Acts published.
  • 2025 – Refinements based on LSP learnings, additional Implementing Acts.
  • 2026 – First government-issued EUDI Wallets launched.
  • 2027 – Wallets become mandatory for regulated industries.
• Large-Scale Pilots (LSPs) and Testing
  
  • Current LSPs will run until mid/late 2025.
  • New LSPs will start in mid-2025 to expand wallet use cases.

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Concerns and Challenges in EUDI Wallet Implementation

Fragmented Wallet Landscape

• Each wallet must be certified at the national level, tied to specific eID schemes.
• Existing eIDs (such as BankID) will continue to exist alongside wallets, leading to a complex identity ecosystem.
• Interoperability challenges between different national wallets and private-sector solutions.

Immature Standards and Technical Limitations

• Many technical specifications are still in development and not fully tested at scale.
• Interoperability is difficult, as multiple vendors and ecosystems must integrate.
• The Architecture Reference Framework (ARF) is still evolving, which means some requirements may change.

Challenges with Legal Entities (Organizational Identity)

• Governments do not fully understand the concept of organizational identity.
• No unified legal framework for business identity across EU member states.
• Different legacy systems and policies for managing business identities, making harmonization difficult.

Focus on “eID” Over Data Sharing

• Data sharing capabilities are not well-defined, limiting usability beyond authentication.
• Many organizations need more than just identity verification, they require trust frameworks for sharing attributes.
• Cross-border interoperability challenges make data portability difficult.

Burdens for Private Sector and Everyday Use Cases

• Regulatory burden on businesses is high, especially for those handling identity verification.
• No clear distinction between qualified and non-qualified issuers, creating uncertainty.
• Only registered relying parties can interact with wallets, restricting participation.
• Adoption for everyday consumer services will be challenging, as strict requirements may discourage businesses from integrating.

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Future Outlook and Open Questions

• Scalability Issues
  
  • One-size-fits-all approaches won’t work across different industries.
  • Balancing privacy, security, and usability is crucial.
• Regulatory Evolution
  
  • Legislation will evolve annually to accommodate emerging standards.
  • Some industries (e.g., gambling, crypto) may push for early adoption.
• Selective Disclosure and Privacy Enhancements
  
  • Wallets will allow users to share only necessary attributes.
  • Zero-knowledge proofs (ZKPs) not yet legally recognized but expected to be added.
• Final Thoughts
  
  • Governments will drive initial adoption, but private sector buy-in is needed.
  • Interoperability remains a major challenge.
  • Wallets are coming – businesses should prepare roadmaps now.

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