The way we authenticate and identify ourselves online is evolving fast – and so is the way we pay. As digital payments become the norm, the need for secure, seamless, and interoperable identity verification has never been more critical. Enter eIDAS 2.0: the European Union’s updated digital identity regulation promises to transform how individuals and businesses prove who they are across borders.
From enabling strong customer authentication (SCA) to streamlining anti-money laundering (AML) checks, eIDAS 2.0 isn’t just a regulatory update: it’s a catalyst for innovation in payments, banking, and public services. With the European Digital Identity Wallet (EUDI Wallet) at its core, the regulation could make account-to-account payments safer, faster, and more convenient, while laying the groundwork for a truly digital single market in Europe.
We’ll explore what eIDAS 2.0 is, its key milestones, and its likely impact on payments, with a particular focus on SCA, AML, and the future of account-to-account transactions.
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What is eIDAS 2.0?
In an increasingly digital Europe, the need for secure, reliable, and interoperable online identities has never been greater. This is where the European Digital Identity Regulation, or eIDAS 2.0 (Regulation (EU) 2024/1183), comes into play.
eIDAS stands for electronic Identification, Authentication and Trust Services. Building on the original eIDAS framework from 2014, the new iteration aims to make digital identity verification simpler, safer, and universally accepted across EU Member States.
At the heart of eIDAS 2.0 is the European Digital Identity Wallet (EUDI Wallet). This digital tool allows EU citizens to store and use verified identity credentials for various online activities – from accessing public services to completing financial transactions. For businesses, banks, and fintechs, EUDI Wallets offer a standardised, secure way to verify users’ identities, reducing reliance on fragmented national systems or multiple login credentials.
By establishing a trusted digital identity ecosystem, eIDAS 2.0 enhances security, lays the groundwork for frictionless online interactions, and opens the door to innovations in payments, banking, and public services. In short, it’s a crucial step toward a truly digital single market in Europe.
Key dates and milestones
eIDAS 2.0 is being rolled out in carefully staged phases, giving governments, banks, and businesses time to prepare. Understanding the timeline is essential – especially for payment institutions that must adapt their authentication and onboarding processes.
Here’s what it looks like:
May 20, 2024 – Regulation enters into force
eIDAS 2.0 officially became law, setting the foundation for a new European framework for digital identity.
December 2024 – Implementing Acts for EUDI Wallets
The first Implementing Acts (IAs) were published, outlining technical and operational rules for the European Digital Identity Wallet. These provide clarity on how wallets should work in practice.
December 2026 – Wallets for all citizens
By this date, every Member State must make at least one EUDI Wallet available to its citizens, ensuring universal access across the EU.
December 2027 – Acceptance by relying parties
Banks, payment institutions, and e-money providers must be ready to accept EUDI Wallets as a method of strong customer authentication (SCA). This marks the point where eIDAS 2.0 will have a direct, day-to-day impact on payments.
At a glance: The regulation is already in force, but the critical deadlines for payment providers come in 2026 (wallet availability) and 2027 (mandatory acceptance).
eIDAS 2.0 and Strong Customer Authentication
Strong Customer Authentication (SCA), introduced under PSD2, has already transformed how payments are secured in Europe. But for some users, SCA has also meant added friction – extra passwords, one-time codes, or app confirmations that slow down the checkout process.
This is where eIDAS 2.0 and the EUDI Wallet come in. By allowing citizens to authenticate themselves with a single, trusted digital identity, the wallet provides a seamless way to meet SCA requirements. Instead of juggling multiple credentials or relying on less secure methods, customers can prove both their identity and their consent in just a few steps.
For payment institutions and banks, this means:
- Simplified authentication workflows: A standardised method across Member States reduces the need for complex integrations with different national systems.
- Improved security: Stronger identity verification lowers the risk of fraud, account takeover, and identity theft.
- Better customer experience: Friction is reduced at checkout, helping merchants minimise cart abandonment and payment drop-offs.
Looking ahead, eIDAS 2.0 could do more than streamline authentication. As reliance on the EUDI Wallet grows, it has the potential to reshape how authorisation is handled in payments, raising questions about whether it could eventually support the transaction approval process itself.
For now, its role is clear: providing a stronger, smoother path to SCA compliance.
eIDAS 2.0 and Anti-Money Laundering (AML)
One of the most immediate opportunities eIDAS 2.0 creates for the financial sector is in customer due diligence. Today, Know-Your-Customer (KYC) checks can sometimes be slow, manual, and fragmented across jurisdictions. Each bank or payment provider typically collects documents, verifies them, and cross-checks identities against databases – a process that can be both time-consuming for institutions and frustrating for customers.
The EUDI Wallet has the potential to change this. With citizens able to store verified identity attributes (such as name, date of birth, or residency status) in their wallet, payment institutions could use this information to perform Anti-Money-Laundering (AML) checks quickly and securely.
For compliance teams, the benefits are clear:
- Streamlined onboarding: Customers can share verified identity data in seconds, reducing drop-offs during the sign-up process.
- Consistency across borders: A standardised EU-wide approach helps avoid duplication of KYC checks when operating in multiple Member States.
- Stronger audit trails: Wallet-based identity verification ensures that AML checks are more reliable and easier to prove during audits.
In practice, eIDAS 2.0 could lower costs for institutions, accelerate onboarding for customers, and reduce compliance risks. More importantly, it aligns identity verification with the EU’s broader push toward harmonised, digital-first financial regulation, where trust and security underpin every transaction.
How is eIDAS 2.0 likely to impact payments?
For payment providers, the implications of eIDAS 2.0 go well beyond compliance. By standardising how identity is verified and authenticated across Europe, the regulation could significantly reshape the way payments are initiated and approved.
Streamlined onboarding
Payments and financial services often stumble when onboarding new customers. Lengthy KYC processes lead to high abandonment rates, especially in digital-first channels. As mentioned above, EUDI Wallets enable customers to instantly share verified identity attributes, cutting paperwork down to a few clicks.
Enhanced security
Fraud remains one of the biggest costs in payments. By embedding stronger identity verification into every transaction, EUDI Wallets could reduce the risk of account takeovers and fraudulent onboarding. For banks and fintechs, this means stronger defences without adding layers of friction.
Frictionless user experience
From e-commerce checkouts to mobile banking logins, users want speed and simplicity. EUDI Wallets offer exactly that: a single, trusted method of authentication that works across services and borders. For merchants, this could mean fewer cart abandonments and higher conversion rates.
Potential for change
Perhaps the most intriguing question is whether eIDAS 2.0 will extend its influence from authentication into authorisation – not just proving who you are, but approving the payment itself. While this is still under discussion, the potential is clear: a unified digital identity that could simplify the entire payments flow from start to finish.
In short, eIDAS 2.0 could transform payments by making them safer, simpler, and smarter – with identity at the heart of every transaction.
eIDAS 2.0 and account-to-account (A2A) payments
Account-to-account (A2A) payments are gaining traction in Europe, driven by initiatives like SEPA Instant Credit Transfer and open banking. Yet one of the biggest barriers to wider adoption has been trust and user experience. Consumers often hesitate to authorise direct bank payments if the process they use to authenticate with their bank feels cumbersome.
eIDAS 2.0 has the potential to change that. With an EUDI Wallet, authentication becomes even stronger and simpler. Any customer initiating an A2A payment could prove their identity and authorise access to their bank account in just a few taps, removing older forms of authentication such as passwords, SMS codes, or third-party verification.
For A2A payments, the key benefits could include:
- Higher consumer trust: Standardised identity verification reduces the perceived risk of sending money directly from a bank account.
- Further reduced friction: A smoother authentication process makes A2A payments even faster and convenient.
- Cross-border payments: With wallets interoperable across Member States, cross-border A2A payments could become even more seamless and reliable.
For banks and fintechs, the challenge will be ensuring their systems are ready to integrate with EUDI Wallets by the December 2027 deadline. But the opportunity is significant: eIDAS 2.0 could provide the missing layer of trust and usability that helps A2A payments scale from niche to mainstream in Europe.
Challenges and considerations for adoption
While eIDAS 2.0 promises a safer, smoother, and more interoperable payments ecosystem, the path to full adoption comes with practical challenges for banks, fintechs, and other parties. Understanding these hurdles is critical for planning a successful rollout.
Member State readiness
The regulation requires each EU Member State to provide at least one EUDI Wallet by December 2026. Differences in national implementation speed and technical infrastructure could create uneven access for customers and varying levels of integration for businesses.
Integration complexity
For banks and payment providers, integrating the EUDI Wallet into existing systems is not trivial. Legacy infrastructures, varied authentication flows, and multiple channels for customer interaction all need to be aligned with the new digital identity framework.
Interoperability across borders
One of eIDAS 2.0’s core goals is EU-wide interoperability. However, ensuring that wallets issued in one Member State work seamlessly with institutions in another requires robust standards, testing, and collaboration across borders.
Regulatory alignment and compliance
Institutions must ensure that adopting EUDI Wallets satisfies not only eIDAS 2.0 requirements but also PSD2, AML, and other relevant regulations. This can require updates to internal policies, audit trails, and risk management frameworks.
Despite these challenges, early planning and engagement with regulators, technology partners, and industry groups can help institutions capitalise on the opportunities that eIDAS 2.0 offers, from frictionless authentication to streamlined onboarding and stronger A2A payment adoption.
Looking ahead: The future of payments with eIDAS 2.0
eIDAS 2.0 isn’t just a regulatory milestone: it’s a springboard for the next generation of digital payments in Europe. As EUDI Wallets roll out, banks and payment providers will gain a standardised, secure, and user-friendly way to authenticate customers, streamline onboarding, and reduce fraud.
Looking forward, the possibilities extend beyond compliance:
- More frictionless A2A payments: Easier account-to-account transfers could further challenge card dominance.
- Cross-border efficiency: Interoperable wallets make pan-European transactions smoother.
- Innovation potential: EUDI Wallets might evolve from authentication to payment authorisation.
- Stronger security: Verified digital identities help reduce risk and improve AML compliance.
Institutions that embrace eIDAS 2.0 early can turn compliance into a driver of growth, trust, and innovation, laying the foundation for a truly digital European payments ecosystem.
Conclusion
The way consumers authenticate and identify online is evolving fast, and so is the adoption and use of Instant Payment services such as those by Brite. For information about how to stay ahead of the curve and offer frictionless A2A payments, get in touch now. Or if you would like to find out about the next big regulatory change set to impact payments, download our guide to Payments Service Directive 3 today!
