EU Payments Compliance: Digital Identity Regulation (eIDAS 2.0)
EU industry groups welcome eIDAS 2.0, expecting it to boost eID solutions and EUDIW user experience. However, they caution its wording implies mandatory full payment sphere inclusion, risking high costs for merchants. They urge making EUDIW's full payment cycle use optional.
eIDAS 2.0: EU Payments in Digital Identity Regulation
The European Commission's proposal for a European Digital Identity Regulation (eIDAS 2.0) has been endorsed by a number of European industry bodies, including the European Association of Cooperative Banks (EACB) and the European Association of Payment Service Providers for Merchants (EPSM). They think the plan will hasten the creation of eID solutions and enhance the European Digital Identity Wallet's (EUDIW) user experience. The associations do, however, issue a warning because the proposal's current phrasing suggests that eIDAS 2.0 will require the inclusion of the whole payment industry, which could result in large, unforeseen expenditures and investments for retailers and the payment ecosystem. They urge lawmakers to change the legal text to keep the mandatory acceptance of the full payment lifecycle outside the purview of the Digital Identity Regulation and suggest that the use of the EUDIW for the entire payment cycle be elective.
Balancing Compliance and Costs: eIDAS 2.0 Implications for European Payments
Several European industry associations, including the European Association of Cooperative Banks (EACB) and the European Association of Payment Service Providers for Merchants (EPSM), have endorsed the European Commission's proposal for a European Digital Identity Regulation, or eIDAS 2.0. They think that by implementing the European Digital Identity Wallet (EUDIW), this rule will improve user experience and hasten the development of electronic identity (eID) solutions. Concerns have been expressed, meanwhile, about eIDAS 2.0's required inclusion of the whole payment space, which may force businesses and the payment ecosystem to incur large, unforeseen expenditures.
Any modifications arising from the proposal will directly impact cooperative banks and merchant payment service providers. In order to comply with the mandated acceptance of the whole lifecycle of payments through the EUDIW, cooperative banks may need to modify their systems and procedures. This change can necessitate large financial outlays and unanticipated expenses. In a similar vein, merchant payment service providers would encounter difficulties incorporating the EUDIW into their infrastructure and payment systems, which would result in unforeseen costs and expenditures.
eIDAS 2.0 has potential effects that go beyond financial institutions. For example, it would be necessary to upgrade or replace over 15 million payment terminals in the European market and make substantial adjustments to web stores' payment sites. This level of infrastructure change may cause disruptions in the payment environment since it requires a significant investment of time and resources from merchants and acquiring payment service providers.
Industry associations have also brought attention to the liability issue. Liability is not sufficiently addressed in the proposal's current form, which may make it difficult to apply to payments. By eliminating the uncertainty surrounding liability and facilitating a more seamless implementation of eIDAS 2.0, making payment requirements nonmandatory would provide banks and merchants greater freedom and control over payment procedures.
Financial institutions, retailers, and payment service providers should proactively evaluate the impact on their operations and budgets in order to minimize any potential difficulties brought about by the rule. They can interact with trade groups and government authorities to offer input on the phrasing of the legislation and promote an optional strategy for utilizing the EUDIW across the whole payment cycle. Stakeholders can impact the timing and guarantee a more gradual integration that fits with their operational skills and priorities by closely monitoring the regulation's evolution and working together.
The progress of the European Commission's proposal for eIDAS 2.0 and following legislative processes will define the implementation timescale, even if the timeline for changes resulting from the article is not specified. In order to establish an effective and user-friendly payment landscape for customers, merchants, and financial institutions alike, adapting to these potential changes will require careful planning and thought from all parties involved.
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Vittoria Barbieri
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