The EU Digital Identity Wallet will reshape verification across Europe, offering new assurance for PSPs, but rollout will be uneven, and businesses must prepare for varied adoption.
Digital ID systems are making headlines worldwide. In China, India, the United Kingdom, and the United States, digital IDs are advancing at different speeds, but the direction of travel is set. Forecasts suggest that nearly 5 billion people will have some form of digital ID by the end of the decade.
By the end of 2026, every EU member state must offer its citizens and residents a national digital identity wallet. By the following year, all payments service providers will be required to accept the EU Digital Identity Wallet as a valid form of identification.
These secure mobile apps represent a step away from scanning physical ID documents to sharing certified digital identity credentials; specific identity data such as name, address or date of birth, or a certified attribute, proof of age or the right to drive.
Good news for regulated PSPs, fintechs, and financial services seeking strong identity assurance for KYC checks and shaving seconds off the identity verification experience for new and returning customers.
While multinational EU regulation will drive adoption of digital IDs, cross-border customer due diligence is still some way from a single, unified system and standard for digital identity assurance.
Is the EUDI Wallet a single digital ID system?
If your business is operating across multiple EU countries, you can expect to see differences in how your local customers’ Wallets will work, what credentials are available, how you can integrate with them and when.
Austria, Italy and Poland are rapidly developing EUDI Wallets from existing national apps. Poland’s mObywatel app already has over 18 million downloads, offering both digital IDs, licences and other digital documents. There will be several apps offering core digital ID attributes in Germany. Built on its legacy Personalausweis eID infrastructure and issued by accredited Wallet providers, Germany has added choice but also complexity, which will affect the timing of its rollout.
These differences—in scope, governance and timing—highlight national flavours to Europe’s international digital ID vision. Mutual recognition between member states is mandatory, but interoperability will require adaptation. Convergence may happen over time, but for the first few years, we should expect transition and variation.
Will the EUDI Wallet provide strong customer authentication?
The EU Digital Identity Wallet will become a powerful new tool for strong customer authentication (SCA) under the EU’s PSD2 rules, but it’s not a magic bullet just yet.
One of the most common and important questions concerning any form of digital identity verification and the EU Digital Identity Wallet is “Is it secure?”, and the EU Digital Identity Wallet is no exception.
The Wallet is designed to meet SCA standards for online payments. In practice, however, industry analysis suggests that apps are likely to serve as one of the two authentication factors in the two-factor authentication process and will not always meet all SCA requirements in every payment scenario.
While the regulation that underpins the Wallet specifies core security architecture standards, authentication mechanisms between apps will differ. Some apps may not require biometric verification of the Wallet holder’s identity, so possession of the Wallet will not suffice to complete 2FA using biometric authentication (fingerprint or facial recognition). This means that if the owner’s device is compromised, fraudulent sharing could occur without the owner’s consent.
What constitutes ‘strong customer authentication’ also requires some regulatory fine-tuning. The three levels of assurance that underpin ‘Strong User Authentication’ in the EUDI framework—‘Low’, ‘Substantial’ and ‘High’—do not map precisely to the PSD2 requirements for SCA in electronic payments.
In short, this digital ID will underpin SCA across Europe, but until interoperability, scope of obligation and liability are settled, this will not happen everywhere all at once.
Will customers want to use the EUDI Wallet?
The assumption that rollout will automatically lead to mass citizen adoption of the EUDI Wallet remains untested; mandating acceptance is not the same as motivating large-scale adoption. Time will tell.
PSPs will be legally required to accept the Wallet from July 2027, but customers face no obligation to use it for identification or authentication. Without clear incentives or trust in digital ID infrastructure, people may simply stick with familiar methods. The EUDI Wallet’s success will hinge on voluntary engagement, not regulatory compulsion.
What should your business do right now to be ready?
The world is shifting towards digital IDs and digital-native systems for verifying identity credentials. The EU Digital Identity Wallet is a first, multinational system that will become an essential part of the identity mix, complementing existing verification methods.
PSPs, fintech and financial services should act now to be prepared to authenticate customers across Europe:
- Conduct a digital ID readiness audit to ensure your systems can integrate the EUDI Wallet as an authentication option and handle its combination with other identity verification options.
- Map your existing identity verification processes—onboarding, authentication, digital signatures—to identify where your platform aligns or diverges from the eIDAS EUDI Framework. Prioritise use-cases with the highest business value or risk.
- When designing a payment flow with an identity verification or authentication process, don’t assume the EUDI Wallet alone is a silver bullet. Maintain flexible authentication options to achieve SCA in every market and payment scenario.
