No Payments, Please: EU Banking Lobby Pushes For eIDAS 2 Revision

April 13, 2023
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European banking associations have made a call for the removal of payments from the scope of the EU’s new digital identity regulation.

European banking associations have made a call for the removal of payments from the scope of the EU’s new digital identity regulation.

EU lobby groups have made a new intervention to encourage co-legislators to abandon amendments made to planned digital identity regulation, otherwise known as eIDAS 2 (electronic IDentification, Authentication and Trust Services).

Several trade associations, including the European Banking Federation, the European Association of Cooperative Banks and the European Savings and Retail Banking Group, have complained that the co-legislators' positions “are currently open to interpretation”.

In particular, they have taken issue with Recital 31 and Article 12b.2, as adopted by the European Parliament, and the corresponding Article 6db.2 of the Council’s General Approach.

“The current wording seems to imply that the full payment sphere is included in eIDAS 2.0 on a mandatory basis,” the joint statement warns.

VIXIO has previously heard rumours among the EU’s payments industry that the amendments were included “accidentally” by parliamentarians, rather than being purposefully added to the regulation, which was first proposed by the European Commission in May 2021.

Impact on payments

Recital 31 of the Parliament’s recently adopted approach dictates that “secure electronic identification and the provision of attestation of attributes should offer additional flexibility and solutions for the financial services sector to allow identification of customers and the exchange of specific attributes necessary to comply with … or to support the fulfilment of strong customer authentication requirements for account login and for initiation of transactions in the field of payment services”.

Meanwhile, Article 12b.2 dictates that private relying parties providing services are required, by the EU or national law, to use strong customer authentication (SCA) for online identification, including banking and financial services.

It says that financial firms “shall also offer and accept the use of European Digital Identity Wallets and notified electronic identification means with assurance level ‘high’ issued in accordance with this Regulation for identification and authentication”.

According to the financial sector associations, if widely used cards and payment specifications were included in the new EU digital identity wallet (EUDIW) infrastructure, huge investments would be required 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 joint statement says.

In addition, the trade associations further suggest that deleting payments from the scope would solve the general issue of the liability that banks would face. “The proposal in its current form does not sufficiently address the question of liability, which impedes applying its provisions to payments.”

The associations have called on legislators to keep payments out of the scope of the Digital Identity Regulation and recommend that, to avoid the mandatory nature of the acceptance of the EUDIW in terms of SCA on payments, limiting such mandatory acceptance to the verification of the user’s identity only.

These trade associations are not the first to express concern about the current state of affairs.

In March, the European Association of Payment Service Providers for Merchants (EPSM) urged the “European lawmakers to make clear that card payments with SCA will be out of the scope of the planned eIDAS 2.0 regulation”.

“There should be no forced mandate to add expensive new hardware and software to the globally accepted card infrastructures “EMV chip and PIN” (at POS terminals) and “EMV 3DS” (in ecommerce)”, its statement read.

“In the sense of 'better regulation', also in the interest of merchants and ultimately the European citizens, we hope that the European lawmakers will take note of these comments.”

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