What is an e-wallet and how does it work? 

 

Can you imagine having all your documents and cards in a single application that’s completely secure and guarantees your privacy? Bank cards, ID cards, health cards accumulate in our wallets. This also includes modern electronic ID cards, digital certificates, Cl@ve, and access to various platforms and public administrations, both state and regional, which are becoming more numerous and therefore more complicated to manage. This is why the need for e-wallets is becoming more and more pressing. 

However, having all our data on one platform presents certain questions regarding safeguards because who is the custodian of that data? Can companies have access? What about the different administrations? In the area of data and privacy, Europe seeks to be an international benchmark with regulation that focuses on citizen sovereignty over data. At the same time, it seeks to unify criteria in all the countries that form part of the European Union in order to facilitate interconnection between member states. The Chinese and US models are very different in this respect. In this article we’ll look at the three models. But let’s start at the beginning: What is an e-wallet?

What is an e-wallet? 

An e-wallet is an online application or platform for storing, managing and performing financial transactions, online payments or administrative tasks. E-wallets serve the same functions as a traditional physical wallet, such as carrying cash, credit or debit cards, loyalty cards, ID cards and driving licences, among others. Although there are many types of e-wallets, most of those on the market are applications for banking transactions: payments, collections, transfers. There are also some e-wallets focused on cryptocurrencies and others on loyalty and discount cards. But to understand how far the functionality of an e-wallet can go, we need to talk about digital identity. 

Digital Identity

Digital identity is one of the tools that guarantees the unambiguous identification of a person for any online action and facilitates that the right service is provided to the person who is actually entitled to receive it, e.g. for banking purposes. In Europe, it will be available to EU citizens, residents and businesses who wish to identify themselves or confirm certain personal information. This European identity will be managed through the European digital wallet. In 2021, the European Commission published a proposal for a Regulation and recommendations on the development of a common legal framework for digital identity in Europe. After some revisions, the Council and the European Parliament reached an agreement on the content of this proposal on 8 November.   eIDAS2, a regulation based on the 2014 eIDAS (European electronic identity recognition system), will be officially implemented in the first half of this year. This European digital identity will be characterised by interoperability and collaboration between Member States. This is an essential aspect of achieving an efficient and reliable system that serves both public and private services. This approach aims to provide European citizens with a more secure and frictionless online experience, wherever they are in the EU. According to Ignacio Alamillo, who contributed to the drafting of IDAS2, the new regulation establishes a “European ID wallet in which citizens will have a first credential issued by the State with personal identification data to authenticate us before third parties (the National Identification Document or DNI in Spain) and in that same wallet, they can receive other credentials to accredit any type of attribute assigned to our identity: accreditation of a large family or academic diplomas, for example”.

How does an e-wallet work?

At Gradiant we have developed a digital wallet that has been one of the first to be certified by EBSI, the European blockchain network. The wallet developed through the IMPULSE project was one of the first to receive the European level conformity seal for its security and alignment with the regulatory model for the digital identification of citizens. 

This e-wallet consists of an app in which the citizen enters his or her data. To register, users must first prove their identity online by presenting their ID card and taking a selfie. The software checks that the document corresponds to that person’s document by means of biometric recognition and document verification tests based on artificial intelligence. For public administrations, IMPULSE develops the software necessary to recognise the identity of the citizen after registration through a QR code, so that they can carry out any online procedure with all the security guarantees required and respecting the privacy of their data.  

What can be done with the European digital wallet?  

The possibilities for the use of a digital wallet are very diverse. In 2023 in Europe, pilots were launched in 250 private companies and public entities across 25 Member States, Norway, Iceland and Ukraine. They are working on these processes:

• Access to public services: applying for a passport or driver’s licence, filing taxes or accessing social security information.
• Opening a bank account: verifying a user’s identity when opening a bank account online eliminates the need for the user to repeatedly provide personal information
• SIM registration: proof of identity for the purposes of pre- and post-paid SIM card contracts (registration and activation). This reduces fraud and costs for mobile network operators.
• Driving licence: storage and presentation of the driving licence for both physical and online interactions.
• Contract signing: create secure digital signatures to sign contracts online, eliminating the need for paper documents and physical signatures.
• Requesting prescriptions: providing the prescription to pharmacies so that medical products can be dispensed.
• Travel: submit travel document information (e.g. passport, visa and others). This allows quick and easy access when going through airport security and customs.
• Organisational digital identities: to prove that you are a legitimate representative of an organisation.
• Payments: verification of a user’s identity when initiating an online payment.
• Education certification: proof of possession of educational credentials, such as diplomas, degrees and certificates that facilitate applications for employment or further training.
• Access to social benefits: the EU digital identity wallet could be used to securely access a user’s social security information and benefits, such as retirement or disability benefits. It can also be used for the European Health Insurance Card

One of the major differences with the Chinese model is that the use of this wallet will be voluntary and free of charge for individuals. However, it will be mandatory by law for public sector entities to require the use of an electronic form of identification. 

The big difference with the American model is that each person will self-manage all their credentials (name, age, gender, health data, bank details, etc.), and in Europe it will have a common framework across all EU member states. Far from this standardisation of criteria, in the United States each state has its own regulations. 

The European model is again a global beacon in the way it sets strong standards to protect the privacy of citizens’ personal data. This guarantee is in addition to other benefits: the implementation of a European digital wallet can save costs for public administrations and improve public services by making them more efficient.

El proyecto IMPULSE ha sido aprobado en la convocatoria Transformative impact of disruptive technologies in public services (DT-TRANSFORMATIONS-02-2018-2019-2020).