The EU Digital Identity Wallet is an ambitious project from the European Union that hasn’t yet attracted much attention, but is worth keeping an eye on as it could have big payoffs in the coming years.
The goal is to create a universal digital identity system for citizens. If all goes as planned, Europeans will be able to download and use a free EU Digital Identity wallet to access a wide range of public and private services, using identity verification and other credentials stored in an app on their smartphones.
Following the recent adoption of key legal frameworks, EU countries are on track to issue the first EU digital identity wallets by the end of 2026. Unlike current national e-ID schemes, future Pan-EU wallets will be recognised in all member states.
National electronic ID systems have been available in some European countries for years, with Estonia in particular being a pioneer in digital ID, but regional legislators have set themselves the goal of creating the conditions for a digital ID system that would work across the EU single market since 2021.
Therefore, while there will not be a single universal EU wallet app that everyone can use, the aim is to establish a system where different wallet apps can work anywhere in the EU, in line with the EU’s Digital Single Market mission.
An all-purpose EU digital identity wallet?
One obvious motivation for setting up an EU Digital ID wallet is convenience.
Europeans will be able to download the wallet app onto their smartphones and devices to store and selectively share key authentication information when they need to verify their identity, prove their age, etc. The wallet can be used for identity verification both online and in the real world. It will also act as a digital repository for official documents such as driver's licenses, medical prescriptions, education records, passports, etc. E-signature functionality will also be supported.
The general idea is that it saves you the trouble of managing various pieces of paper or remembering where you put your bank cards.
But there are other, more strategic motivations at work: The European Union has woken up to the value of data in the rapidly evolving age of AI, and policies that remove friction and make information flow more easily—or at least try to get citizens to share their personal data for purposes such as signing up for new services or making transactions—fit the political game plan.
The EU has extensive digital regulations and they are growing. This is where an EU-wide e-ID would clearly help. For example, if the EU could demonstrate that it has a “universal, secure and trusted” digital ID system in place, as the EU Digital ID Wallet is billed, it would make it easier to implement aspects of the online governance regime established by the Digital Services Act (DSA). Think, for example, of allowing privacy-preserving access to adult content websites to people who can prove they are over 18 using their digital ID.
Another big EU digital policy push in recent years has been to remove barriers to data sharing and reuse, including across internal borders, by establishing infrastructure and rules for a so-called Common European Data Space. And an EU universal digital ID, with its promise of citizen privacy and autonomy, could make Europeans more comfortable sharing more information, facilitating data flows into these strategic spaces.
Interestingly, however, EU President Ursula von der Leyen chose a very different framework for wallet opportunities when she announced the plan in her September 2020 State of the Union address, noting the increased privacy risks for citizens who are constantly asked to share their data to access online services. The wallet responds to this concern with support for selective data sharing as a core feature. Thus, in addition to the EU's pledge that wallet use will remain optional for citizens, the main selling point to users is that “privacy is protected” since users are in control and can choose what data to share and with whom.
But a privacy-preserving approach could also help the EU unlock opportunities for more granular digital regulation. As mentioned above, this approach would give citizens the means to verify their age but not reveal their identity, allowing wallet app users to sign in anonymously to age-restricted services. The EU hopes that wallets will support broader governance goals under the DSA, which is likely to introduce stricter age verification requirements for services with content that may not be suitable for children, provided that appropriate “privacy-preserving” technologies are in place.
Other use cases for the wallet discussed by the EU include an apartment rental scenario, where citizens could share verified information about their rental history with potential landlords without having to verify their identity until signing the contract, and people with multiple bank accounts in the EU could use the wallet to simplify the approval of transactions.
Online services will be required to accept Pan-EU credentials, which are therefore also proposed as a European alternative to existing (commercial) digital identity services, such as the “sign in” credentials offered by large tech companies like Apple or Google.
Challenging Big Tech’s Data Dominance
Here, EU lawmakers appear to be responding to concerns about how much power has been handed over to the big platforms because of the critical digital infrastructure they own and operate.
It's not surprising that the European Commission adopted the EU Digital ID Wallet proposal during the COVID-19 pandemic, when everyone was wondering about an app that could show their COVID-19 vaccination status. But the public health crisis also sharply highlighted the asymmetric power dynamics between the big corporations that control mainstream mobile technology infrastructure and lawmakers. (Apple and Google literally set the rules for how COVID-19 exposure notification data should be exchanged, and in many cases their technical choices trumped governments' directly expressed preferences.)
Beyond strategic digital sovereignty considerations, the concept of a universal electronic ID wallet is closely tied to the EU's overall commitment to promoting digitalization as a driver of economic development. Assuming the system is well run and reliable, and the wallet itself is user-friendly and easy to use, a universal EU ID has the potential to increase the efficiency and adoption of online services and improve productivity.
Of course, that's a big “if,” and there are significant technical challenges to making the EU's vision of a universal ID system a reality.
Security and privacy are obviously important pieces of the puzzle: the former is essential for any identity and authentication system to work, while the latter is the main selling point of the EU, which needs to convince its citizens to adopt the wallet lest the whole project end up being an expensive waste of money.
There are clear risks with poor implementation; the low adoption rate of unstable national electronic ID schemes shows what can go wrong. Wallet apps need to be elegant and easy to use across the planned use cases, as well as have robust security and privacy. This requires the entire ecosystem of players to get behind the project, or users will not join.
Remember, the competition for digital identity comes from services already built into mainstream platforms, such as “Sign in with Google.” And unfortunately, in the online world, convenience and ease of use often trump privacy concerns.
Privacy could also be a barrier to adoption. After the proposal was announced, concerns were expressed about the EU building a universal ID infrastructure, with some critics pointing to the risk of it expanding capabilities towards Chinese-style social control. Having a reliable technical architecture that protects and firewalls citizens' data will therefore be key to success.
Universally available by 2030
The launch of the EU Digital ID Wallet System has already taken years of preparatory work, but there is still much more testing, standards setting and implementation to come.
To date, the EU has put in place a legal framework for interoperable EU wallets (such as the Digital Identity Regulation, which came into force in May this year). Work on developing secure technical architectures, common standards and specifications is ongoing, but a common EU toolbox has been established. The Commission has also published architecture references on GitHub. The code has been open-sourced, and the EU intends to build the ecosystem infrastructure on common standards, fostering trust and adoption.
The Coalition is also working with industry and public sector stakeholders on large-scale pilot projects to test the proposed technical specifications.
Further preparatory work is needed over the next few years, including a set of implementing acts that will finalize key technical details. Many issues may still arise, but the EU is at least giving itself plenty of lead time to get this right. So, while the first wallets are expected to come online in the next few years, the EU doesn't expect the system to be available to its roughly 450 million citizens until 2030.