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As Brussels veers closer to a final agreement on a digital ID, VIXIO has spoken with the NOBID Consortium, which is developing a large-scale payment pilot for use within the EU-wide digital wallet (EUDIW).
In December 2022, it was announced that NOBID, a multi-country consortium comprising Denmark, Germany, Iceland, Italy, Latvia and Norway, had been chosen to launch a pan-EU payments pilot for the EUDIW.
The pilot will issue the EUDIW in six countries and test interoperability across Europe by exchanging identity and other credentials within the participating countries and with the other selected consortium.
It will focus on payments, a crucial aspect of the EUDIW initiative, and is being funded from the European Commission’s DIGITAL Europe Programme.
“It aims to test in-store/online payments initiated by the EUDIW by utilising existing payment infrastructure for payment issuance, instant payments, account transfers, and payment acceptance,” said Tor Alvik, digital identity specialist director at the Norwegian Digitalisation Agency.
There will also be additional relevant use cases for the banking and identity industry that will also be tested in the pilot and across the region, Alvik told VIXIO.
For example, this will include the customer remote onboarding for which best practices from the Nordic region will be shared and re-used as appropriate.
“Among the main objectives of the project, the pilot will also ensure inclusion of all citizens and convenience for consumers, thanks to close collaboration with the consumer associations in the markets and the leaders in the trust and security industry,” he said.
Building connections
The project has garnered support from a variety of EU leaders in banking and payments. This includes Italy’s Intesa Sanpaolo, Denmark’s Nets and BankID in Norway.
Technology partners participating in the consortium, meanwhile, include France’s Thales, the London-based iProov and Norway’s Signicat, while merchants that will be testing out the payment solution include Elkjø, also in Norway, and REWE Group in Germany.
The group is also open to additional countries and banks joining to test payments within the pilot, as well as other partners that can issue additional certificates to the wallet.
Initial engagement from interested partners can be done via the contact form on the NOBID website, while the formal onboarding process of additional countries and partners will be managed by the consortium once the project commences in the spring of this year.
With members of the European Parliament having adopted a position on the digital identity proposal in February, it looks as if the legislation could cross the finishing line prior to the end of this parliament and commission before elections take place in May 2024.
“The EUDIW is a central initiative in support of the single digital market and the European strategy,” said Alvik.
Alongside the legislative guidelines and technical aspects, the sustainability of the ecosystem and a consistent business model across the region are key to success and adoption, he continued.
“In terms of the technical aspects, the EUDIW aims at providing a harmonised digital identity framework in Europe, this objective is clearly defined at any level of the project and starts by leveraging the existing infrastructures and notified identity schemes into the wallet solutions.”
Therefore, he stressed that the interoperability of the national wallets is “of paramount importance” to achieve the harmonisation objective.
“The NOBID pilot, like other initiatives, will be fundamental to test interoperability of the solutions among the countries and across the different use cases.”
The payments angle
When the European Commission first unveiled its plans for a pan-EU digital identity solution, very little was said about payments by commissioners Margrethe Vestager and Thierry Breton.
However, digital payments have been a key policy issue for the EU during this term, which has seen the instant payments proposal introduced, fervent political support for the European Payments Initiative (EPI) and the beginnings of work on a digital euro.
“The European strategy is to move toward a digital identity-based ecosystem resulting in a digital wallet in the hands of the European citizens,” said Alvik. “In that scenario, payment is an essential capability of the EUDIW, being a core capability of most wallets available today for the user.”
While providing convenience and value to end users, he continued that the EUDIW will also strengthen security, privacy and sovereignty of digital interactions and payments across the region.
“A new wallet architecture will facilitate the transition to a digital economy and further stimulate innovation within the financial sector thanks to the exchange of a variety of attributes and credentials performed by the user under his own control.”
To this end, Alvik pointed out that it is worth remembering that the synergy of identity and payments is a central component of the EU’s Retail Payment Strategy, which was published in 2020, and the digital finance initiatives taking place throughout the trading bloc in support of innovation in payments.
One of these is the digital euro, which the European Commission is expected to release a regulatory framework for soon.
Alvik confirmed that the NOBID Consortium is open to playing a role here. “While focusing on account to account payments, the pilot will be open to existing payment means and future payment solutions, including the digital euro.”
“There are synergies between the wallet and digital euro architecture that can be leveraged during the pilot, since both rely on signed transactions from the intermediary front end and favour instant clearing and settlement,” he said.
Both solutions also rely on strict security requirements for the signer keys.
“It is worth noting that the EUDIW will be issued free of charge to any EU citizen who will want to use it for a variety of use cases and for different purposes, including but not limited to tax, health, driving licence, hence further strengthening the distribution aspect.
“All these aspects make the opportunity of a potential collaboration between the digital euro and the EUDIW very appealing independently from the existing technical alignment,” said Alvik.
“The opportunity will be of course discussed within the consortium and with the commission to agree the best way forward.”
