Identity verification and authentication in payments within an integrated wallet flow? The introduction of the EUDI Wallet, planned for early 2027 at the initiative of the European Union, could make this possible. For banks, PSPs, merchants, and platforms, the question arises as to how KYB/KYC, SCA, checkout, and fraud management will change when verified identity data becomes available on a wallet-based and cross-border basis for end customers and businesses.
From the eIDAS Regulation to the EUDI Wallet
A central element of the eIDAS Regulation, amended in 2024, is the introduction of a European Digital Identity (EUDI) for the electronic identification of citizens, businesses, and public administrations. The EUDI is intended to simplify access to digital services throughout the EU via a digital wallet—the EUDI Wallet—using smartphones and similar devices, and to enable secure authentication when using these services.
The EUDI Wallet is designed as an EU-wide harmonized legal and technical framework for digital identities and data exchange, in which identification documents, qualified attribute statements, certificates, electronic signatures, and other data can be stored in encrypted form. The design of the EUDI Wallet is the responsibility of the individual EU member states, subject to established guidelines. Particularly high standards apply to the wallet’s data protection and security to ensure the confidentiality and integrity of personal data. What makes this unique is that EU-wide, cross-border use is legally mandated.
As such, the introduction of the EUDI Wallet has the potential to significantly transform the payments landscape by serving as a foundational infrastructure for digital interactions. In this blog post, we first aim to provide a regulatory overview of the EUDI Wallet before explaining its strategic relevance for the payments ecosystem.
Regulatory Relevance for the Payment Ecosystem
eIDAS 2.0 provides a clear legal framework for the EUDI Wallet. In the payment context, this legal framework is particularly relevant for onboarding/KYC/KYB, strong authentication, and proof of attributes. Regulated sectors such as healthcare, transportation/mobility, energy, banking and finance, postal services, education, digital infrastructure, and drinking water are required to integrate EUDI wallets into their processes. Very large platforms and marketplaces such as Amazon, Apple, or Google must also integrate the EUDI Wallet into their offerings as key access points for digital commerce and financial services. Certain requirements must be met: service providers and other “relaying parties” must register and disclose their data requirements. In addition to identity, they may also use attribute claims, qualified signatures, or seals when necessary.
Thanks to the common European framework and shared technical specifications, the EUDI Wallet establishes, for the first time, an EU-wide infrastructure for all market participants—with a Europe-wide binding standard for digital identity. In combination with the PSD2’s “ ” framework for payment transactions and the requirements for secure authentication defined therein, the introduction of the EUDI Wallet creates important prerequisites for broad market penetration, particularly in the payment environment.
The strengths of the EUDI Wallet
The planned EUDI wallet includes significantly more features and a more comprehensive scope of services than previous eID approaches. By directly linking identity, attributes, and permissions, standardized solutions can be integrated into the transaction and authentication process at various points along the customer journey. This simplifies the complex customer journey, for example, in embedded finance and platform models.
One-click payments, as are already common in online store accounts or via saved cards on PayPal, Apple Pay, or Google Pay, can be made more secure for providers and users with the EUDI Wallet—for example, by automatically combining the stored payment method with wallet-based authentication or proof of attributes such as the buyer’s age (relevant when purchasing regulated goods like alcohol or tobacco).
In the banking sector, the EUDI Wallet enables fully digitized and automated onboarding and authentication processes as well as secure cross-border digital payments. And in Agentic Commerce, which is automated by AI, the EUDI Wallet is potentially a useful tool for verifying on whose behalf an agent is acting, what they are permitted to do, and whether a transaction is actually authorized.
Another benefit of the EUDI wallet is its ability to better prevent fraud and chargebacks. In cases of fraud involving identity theft, synthetic identities, weak registrations, insufficient age or attribute verification, or account abuse, a cryptographically verified identity—such as that provided by the EUDI Wallet—is just as effective as it is in preventing chargebacks resulting from unauthorized use or false identities.
Furthermore, the introduction of the EUDI Wallet into the payment ecosystem is expected to give rise to new business models centered on verification and attribute orchestration. In Germany, for example, providers will be able to launch additional UX-optimized wallet solutions as a certified alternative to the government-issued reference wallet.
Chances of Success for the EUDI Wallet: An Assessment
Legal enforceability gives the EUDI Wallet an enormous head start—but this does not automatically guarantee success. From OSTHAVEN’s perspective, the EUDI Wallet can only establish itself as a central infrastructure for digital identity in Europe if it succeeds in gaining market traction. A key driver for the scaling and user acceptance of the EUDI Wallet therefore lies primarily in its integration into real-world, high-frequency use cases in the payment environment and attractive use cases.
This requires acceptance by users. While the regulated sectors mentioned above are required to integrate the EUDI Wallet into their processes as a supplement to already proven solutions, there is no mandatory requirement for end customers to use it. They can only be convinced by noticeably more convenient and faster processes: one-click payments and instant onboarding make payment processes more convenient from the user’s perspective. A uniform standard is enormously helpful for this. If we fail to convince users of the benefits, there is a risk that the EUDI Wallet will remain a niche product despite its regulatory anchoring.
Conversely, widespread user acceptance is likely to encourage other market participants to jump on board: While companies and platforms are not required to include the EUDI Wallet in their payment stack, they can assess whether—and for which processes—it makes sense to specifically integrate information from the EUDI Wallet in order to better meet customer needs. In our view, merchants in particular could stand to gain significantly, as they would benefit from improved conversion rates, reduced abandonment rates, and lower fraud.
At the same time, the question arises as to what new competitive dynamics the EUDI Wallet could trigger. From OSTHAVEN’s perspective, banks and PSPs would benefit from efficiency gains because processes could be further automated and streamlined. However, this automation also carries the risk that customer interfaces will change, meaning that banks and PSPs, as the actual providers, will become less visible in the public eye and thus potentially more interchangeable.
Wallet providers and technology platforms, in turn, will increasingly compete for the front end to bring certified wallet offerings to market, either in competition with or as a complement to the government-issued EUDI wallet.
The potential for B2B and representation-related processes is more difficult to assess. Since member states must also provide at least one wallet for businesses, this—in conjunction with signatures and proofs of representation—could transform B2B orders, financial services, insurance, and contractual processes. In November 2025, the European Commission submitted an official proposal for a regulation to establish a European Business Wallet as a supplement to the EUDI framework, which is intended to build upon the existing EUDI ecosystem. It remains to be seen whether, when, and with what changes this proposal will become part of EU law.
In light of changing political and economic conditions, it is also important to keep one key point in mind: even though the EUDI Wallet is not a means of payment, it can serve as a counterweight to dependence on non-European solutions regarding secure identity solutions in the payments sector. It thus represents, alongside Wero and the digital euro, another step toward a competitive European payments market.