Financial firms push for no payments in EU Digital ID
The European Credit Sector Associations (ECSAs) have published a statement calling on the European Parliament and the Council to reconsider the inclusion of payments in the upcoming European Digital Identity (eIDAS 2.0) project.
The ECSAs, which includes The European Banking Federation, the European Association of Co-operative Banks, and the European Savings and Retail Banking Group, published the statement on Tuesday.
In the document, the associations agree that the EU digital ID proposal will incentivize Member States to be more practical in developing e-ID solutions with a broad scope of usage.
“Moreover, the European Digital Identity Wallet (EUDIW) will foster quicker onboarding processes and a better user experience. It will also contribute to the further adoption of digital banking services,” reads the statement.
However, the ECSAs are questioning the interpretation of the wording in the legislation that suggests that the entire payment sphere should be included in eIDAS 2.0 on a mandatory basis.
“If widely used cards and payment specifications were included in the new EUDIW Infrastructure, huge investments would be required not only in the financial sector but also for the overall acceptance network,” the associations wrote.
The move could therefore translate to substantial costs for merchants and service industries accepting card payments in compliance with the second Payment Services Directive (PSD2).
Further, the associations highlighted issues connected with the fact that deleting payments from the scope would also solve the general problem 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,” reads the statement. “This is why the ECSAs call upon the legislators to keep payments out of the scope of the Digital Identity Regulation.”
Currently, the regulation would make member states responsible for any losses from identity theft, but Law360 reports that it does not specify how reimbursement should be requested or received from member states.
Instead, the associations are recommending limiting the mandatory acceptance of the EUDIW to the verification of the user’s identity only, not the additional authentication and authorization procedures required for strong customer authentication (SCA) under PSD2.
The statement comes days after a consortium of Europe’s digital identity stakeholders launched a new program to promote the development of large-scale pilots for the European Digital Identity Wallet, with several use cases not including payments. Another round of pilots, however, is intended to address the potential for the EU Digital ID Wallet for payments.
A recent report from financial services sector technology association Mobey Forum indicates that banks and fintechs around the world want to play a role in providing digital identity for payments.