EUDI Wallet – One Identity in Europe

The Perpetually Cumbersome Identification Process

M&A transactions regularly require extensive identification processes (“Know Your Customer” – KYC) involving banks, notaries, registries, and other parties subject to anti-money laundering regulations.

Due to the lack of (Europe-wide) standards, these processes have so far been fragmented. Although the relevant requirements are based on European secondary legislation, particularly the Anti-Money Laundering Directives, their implementation varies across Member States. Identity checks must therefore often be repeated in different countries – leading to increased compliance costs, operational complexity, delays, and inefficient processes, which is particularly evident in cross-border transactions.

Shortcomings of the current European eID infrastructure

In our experience, the existing European eID plays no role in this regard.

While the eID is a form of digital identification that enables users to access digital services by verifying a person’s identity through the eID system, the primary aim of the eIDAS Regulation (eIDAS Regulation, EU Regulation No. 910/2014) was the cross-border recognition of national electronic identification means.

However, an evaluation by the European Commission in 2020 already revealed that the regulation fell short of expectations. Due to its complicated handling and limited application possibilities in the private sector, the eID is hardly used in its current form. Furthermore, the eID is not recognized across Europe or, in some cases, across national borders, but is primarily viewed as part of the national identity.

Will the EUDI Wallet help?

The amendment to the regulation (eIDAS 2.0, EU Regulation No. 2024/1183) established new objectives and requirements to address the existing issues. Unlike its predecessor, the regulation is not limited to technical principles and (regulatory) minimum standards but rather establishes the framework for a Europe-wide digital ecosystem that digitizes and simplifies communication between citizens, public authorities, and businesses. It also aims to strengthen European independence.

In future, the EUDI Wallet will allow, among other things, proof of one’s identity such as the national ID card, driving licence or health insurance to be stored digitally. In addition, personalised tickets could also be stored digitally in the EUDI Wallet in the longer term (e.g. a boarding pass). Personal certificates will enable qualified electronic signatures, which have the same legal value as a handwritten signature, and support secure payment functions. The EUDI Wallet is thus intended to become a “digital wallet” that can be reused across borders and institutions.

Implications for Transaction Practice

The practical efficiency gains offered by the EUDI Wallet could be significant.

Identification and onboarding processes, which previously could take several days or weeks, could be reduced to just a few minutes in the future thanks to the immediate provision of verified (identity) attributes or proof of representation (e.g., corporate office) from the EUDI Wallet. This would enable financial institutions to rely on already verified and certified proof of identity or proof of representation without having to conduct their own comprehensive checks again.

This applies to cross-border situations where identities verified once can be reused throughout the EU without having to undergo new checks. Identification could also be made simpler and more efficient for registries and notaries in this way.

The achievable standardization and automation of KYC and comparable processes would lead to streamlined procedures, reduced time expenditure, and lower costs, while simultaneously strengthening the legal certainty of digital transactions.

The future, simplified use of qualified electronic signatures via the EUDI Wallet could lead to further efficiency gains and a reduction in friction losses, particularly if the evidentiary effect is harmonized across the Union and functionally equated with traditional written form requirements.

Review and Outlook

The eIDAS 2.0 came into effect in 2024 and requires member states to roll out the EUDI Wallet by November 2026. By early 2027, at least one EUDI Wallet meeting common standards is to be available in every Member State. Germany is following this timeline; here, the EUDI Wallet is currently under development, and initial use cases are being tested in a pilot environment.

Once the first phase – a government-issued EUDI Wallet – is available, additional features, credentials, and use cases will be gradually rolled out. Private wallet providers will also have the option at a later date to have their solutions certified and officially recognized in Germany. This will lead to the emergence of a comprehensive digital and European ecosystem in the coming years.

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