European banks call for rethink on incorporating payments into EU digital identity wallet proposals

European banking association logo large
EUROPEAN BANKING FEDERATION: EUDIW legislation could ‘result in disproportionate costs for merchants and service industries that accept card payments in accordance with PSD2’

The European Credit Sector Associations (ECSAs) are calling on the European Union to re-examine clauses in legislation on the proposed European Digital Identity Wallet that appear to imply that “widely used cards and payment specifications” will have to accept the wallet for strong customer authentication (SCA) for payments “on a mandatory basis”.

The European Banking Federation, the European Association of Co-operative Banks and the European Savings and Retail Banking Group — which are jointly known as the ECSAs — say that they welcome the “wide scope of usage” laid out in the current wallet proposals, but are concerned that including payment systems in the wallet’s infrastructure would require “huge investment, not only in the financial sector, but also for the overall acceptance network”.

“This could possibly result in disproportionate costs for merchants and service industries that accept card payments in accordance with the second Payment Services Directive (PSD2),” the European Banking Federation says.

“In addition, deleting payments from the scope would also solve the general issue of liability banks would face. The proposal in its current form does not sufficiently address the question of liability, which impedes applying its provisions to payments. This is why the ECSAs call upon the legislators to keep payments out of the scope of the Digital Identity Regulation.

“The ECSAs therefore recommend, in order to avoid the mandatory nature of the acceptance of the EUDIW in terms of strong customer authentication (SCA) on payments, limiting such mandatory acceptance to the verification of the user’s identity only.”

The EU’s Industry, Research and Energy Committee approved a proposed update to the European Digital Identity Framework to enable the issuance and usage of the European Digital Identity Wallet in February.

Next: Visit the NFCW Expo to find new suppliers and solutions