eIDAS 2.0: EU Payments in Digital Identity Regulation
A group of European industry associations, including the European Association of Cooperative Banks (EACB) and the European Association of Payment Service Providers for Merchants (EPSM), has welcomed the European Commission's proposal for a European Digital Identity Regulation (eIDAS 2.0). They believe the proposal will speed up the development of eID solutions and improve user experience with the European Digital Identity Wallet (EUDIW). However, the associations caution that the current wording of the proposal implies that the full payment sphere is included in eIDAS 2.0 on a mandatory basis, which could result in significant unplanned investments and costs for merchants and the payment ecosystem. They recommend that the use of the EUDIW for the full payment cycle should be voluntary, and call upon legislators to adjust the wording of the legal text to keep the mandatory acceptance of the full lifecycle of payments outside the scope of the Digital Identity Regulation.
Balancing Compliance and Costs: eIDAS 2.0 Implications for European Payments
The European Commission's proposal for a European Digital Identity Regulation (eIDAS 2.0) has received a positive reception from various European industry associations, such as the European Association of Cooperative Banks (EACB) and the European Association of Payment Service Providers for Merchants (EPSM). They believe that this regulation will accelerate the development of electronic identification (eID) solutions and enhance user experience through the European Digital Identity Wallet (EUDIW). However, concerns have been raised regarding the mandatory inclusion of the full payment sphere in eIDAS 2.0, potentially imposing significant unplanned investments and costs on merchants and the payment ecosystem.
Cooperative banks and payment service providers for merchants would be directly affected by any changes resulting from the proposal. Cooperative banks may need to adapt their processes and systems to comply with the mandatory acceptance of the full lifecycle of payments through the EUDIW. This adjustment could require substantial investments and result in unforeseen costs. Similarly, payment service providers for merchants would face the challenge of integrating the EUDIW into their payment systems and infrastructure, potentially leading to unplanned investments and expenses.
The potential impact of eIDAS 2.0 extends beyond financial institutions. For instance, upgrading or exchanging more than 15 million payment terminals in the European market and making significant changes to payment pages of web shops would be necessary. This scale of infrastructure modification poses considerable time and resource requirements for merchants and acquiring payment service providers, potentially causing disruptions in the payment landscape.
An additional concern highlighted by industry associations is the issue of liability. The current wording of the proposal does not adequately address liability, which could impede its application to payments. Making payment requirements nonmandatory would provide more flexibility and control over payment processes for banks and merchants, resolving the uncertainty surrounding liability and promoting smoother adoption of eIDAS 2.0.
To mitigate the potential challenges posed by the regulation, financial institutions, merchants, and payment service providers should proactively assess the impact on their operations and budgets. They can engage with industry associations and regulators to provide feedback on the wording of the legal text and advocate for a voluntary approach to using the EUDIW for the full payment cycle. By closely monitoring the development of the regulation and collaborating with stakeholders, they can influence the timeline and ensure a more gradual integration that aligns with their priorities and operational capabilities.
Although the timeline for changes resulting from the article is not provided, the progress of the European Commission's proposal for eIDAS 2.0 and subsequent legislative processes will determine the implementation timeframe. Adapting to these potential changes will require careful planning and consideration from all stakeholders involved, ultimately aiming to achieve an efficient and user-friendly payment landscape for consumers, merchants, and financial institutions alike.
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