In the last few years, digitization has become the key that drives growth for most businesses. More than 70% of SMEs in Europe have an online presence today. E-commerce in Europe is growing fast, and most people use some form of digital payment to pay for goods and services. To pay online or to sign up for any service requires sharing some form of ID. But sharing personal details online also brings its share of security concerns. As such, the proposed EU Digital ID wallet is a much-needed step towards creating a safe and secure pan-European payments ecosystem.
Digital Identity in the EU
To break down barriers to e-commerce and support access to a single digital market, the EU has proposed to introduce the European Digital Identity wallet in 2023. It is a biometrically secured digital wallet that allows consumers to link their national digital identities with their personal details like driver’s license, bank accounts, passwords, e-signatures, etc. Users can validate their identity, while choosing how much info to share in order to access any service. The wallet will be based on eIDAS (electronic identification, authentication, and trust services), a regulation that has existed since 2014 in the EU.
The EDI wallet is meant to provide:
- Quick, simple, and secure identity verification.
- Single digital identity to access public and commercial services across the EU.
- Secured sharing of personal data, while keeping track of how much data is shared.
- Added security in digital payments and other online transactions.
European Digital ID and Consumer Trust
Trust is a key factor in business. The ECB’s recent report exploring citizens’ attitudes towards digital payments further draws attention to the growing preference for a secure, pan-European payment method. According to the report, participants highly favoured an easy-to-use, one-stop solution for their payment needs. Users across Europe also widely support the use of biometric methods of payment verification, such as fingerprint or iris scans. Users also desire flexible and adjustable privacy settings to control how much data they share and with whom. User verification is essential for secure payments, and merchants have to ensure the process is smooth and helps them win customers. With the EU digital ID wallet, it will become easier to verify one’s identity more quickly and reliably. Complicated and time-consuming KYC processes can now be completed in a short time. A secure digital ID can be used across sectors and borders. It will simplify the identity verification process and the overall payment process. It will help overcome market fragmentation, create a better standard for cross-border e-commerce, expand the capabilities of a business, and prevent fraud risks.
How Will the European Digital ID Improve E-commerce Payments?
The EU Digital ID aims to give merchants in the EU a strong, secure, and powerful tool for authentication. It simplifies Identity verification and authentication. Moreover, it offers an integrated mechanism to guarantee the safety and privacy of user data.
Some key benefits it will bring are:
- Faster and secure checkout process for shoppers
- Prevent shopping cart abandonment due to complicated verification processes
- Offer better service with real-time instant payments
- No extra security hassles
The digital ID also seeks to create more trust between merchants and customers. Knowing the customer will not only help to avoid fraud but also enable companies to offer a better customer experience.
The EU Digital ID wallet will be of great significance for cross-border e-commerce as well. As a business,
- you save up on compliance costs,
- build more trust among people about safe online transactions,
- easily integrate digital payment methods
With the EID, it will be easier for e-commerce businesses like yours to prioritize your customers, and thus strengthen consumer confidence in your brand. To catch more updates on the EU Digital ID, head over here.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.