Europe is preparing to take another step in the digitalization of its economy. By the end of 2026, member states will be required to offer, at a minimum, a European Digital Identity Wallet for their citizens and residents. The new system stems from the European Digital Identity Regulation, which came into force in May 2024 and updated the previous eIDAS framework.
The wallet will function as an app from which each person can identify themselves to public administrations and businesses, store official documents, and attest to certain attributes. It could include the driver’s license, academic degrees, professional certificates, medical prescriptions, or banking information.
It will also enable qualified electronic signatures with legal recognition. For individuals, the qualified signature intended for non-professional uses must be provided free of charge. The use of the wallet will be voluntary and no one may be discriminated against for choosing not to use it.
Demonstrating a data point without delivering the entire identity
One of its most relevant elements is the so-called selective disclosure. Today, to prove that a condition is met one often has to present a document that contains more information than needed. A company that needs to verify that a customer is of legal age, for example, may also gain access to their name, address, or exact date of birth.
With the wallet, the user could attest only that they exceed the required age, without revealing other data. The system is designed to show what information a company requests before the person authorizes its delivery. Participating organizations must register, identify themselves to the user, and limit themselves to asking for the data declared beforehand.
This model can strengthen privacy, but also simplify compliance with the General Data Protection Regulation (GDPR). The less information a company has to collect, the smaller the volume of data it must store, protect, and subsequently delete.
Less red tape for businesses and consumers
The true economic dimension of the wallet appears in processes such as opening a bank account, taking out insurance, signing up with a telecom operator, university enrollment, hotel check-in, or the accreditation of a professional qualification.
Instead of requesting photographs of documents, repeatedly entering the same data, or conducting manual verifications, the company can receive authenticated information directly from the client’s wallet. The European Commission considers that this can reduce the costs of identity verification, administrative burden, and the time spent checking documentation.
Interoperability will be especially important for the single market. An identity or certificate issued in Spain can be used for a service located in another EU country following common specifications. The wallet can thus reduce one of the main frictions of cross-border activity: the difficulty of proving identity digitally, the powers of representation, or professional credentials.
The framework will require recognition by public services that require electronic identification. It will also need to be accepted by certain companies — excluding micro and small enterprises — when they are required to apply strong authentication, in areas such as banking, finance, transportation, energy, health, telecommunications, education, or digital infrastructure.
A chance for tech SMEs
Although many small businesses are exempt from certain acceptance requirements, the wallet also opens opportunities. Software vendors, fintechs, digital consultancies, integrators, HR platforms, and electronic-signature companies will be able to develop services connected to this ecosystem.
SMEs can voluntarily use it to speed up client onboarding, verify suppliers, prove corporate representation, or sign contracts. The challenge will be to integrate the new specifications without reproducing common mistakes, such as requesting unnecessary information or turning identity verification into an overly complex process.
The technology is already being tested in payments, banking, travel, education, health care, vehicle documentation, and interactions between businesses and public administrations. Six pilot projects have involved about 550 public and private organizations from 26 member states, as well as Norway, Iceland, and Ukraine.
The European Digital Identity Wallet will not by itself eliminate bureaucracy or resolve all trust issues on the Internet. Its success will depend on it being simple, secure, and accepted by citizens and businesses. But it could provide something the European digital economy still lacks in full: a common way to prove who we are and what we can do, without revealing more information than necessary.
