EU Proposes Unified Digital Identity Solution for Businesses

The European Union is advancing plans to introduce a comprehensive digital identity framework specifically designed for businesses, aiming to streamline administrative processes, enhance security, and promote interoperability across member states.

Under this new initiative, businesses operating within the EU would have access to a standardized digital identification tool known as the European Business Wallet. This solution mirrors the approach taken for individual EU citizens with the EUDI-Wallet, offering organizations a secure means of identification and authentication in their dealings with both public authorities and private-sector entities throughout the European Union.

The European Commission intends for the digital wallet to reduce bureaucratic hurdles and operational costs associated with cross-border transactions and regulatory compliance. Projections suggest that widespread adoption of this business wallet could result in annual cost savings exceeding 150 billion euros across the EU, primarily by streamlining documentation, approvals, and other administrative requirements.

The European Business Wallet is set to become a legally recognized instrument, holding the same status as traditional, paper-based, or otherwise legally accepted forms of business identification and documentation. Organizations will be able to use the wallet to digitally sign, timestamp, and seal documents. Moreover, it will facilitate the secure creation, sharing, and verification of digital documents such as licenses, certificates, and official approvals.

While public administrations across EU member states would be obliged to support the European Business Wallet, its adoption by private companies is envisioned as optional under the current legislative proposal. This approach is intended to encourage voluntary uptake while ensuring that government entities are prepared to facilitate digital interactions with businesses.

The initial implementation will require significant investment. The European Commission estimates that public administrations will incur around 7.33 billion euros in the first year, with approximately 6.18 billion euros attributed to one-time costs such as staff training and software adaptation. For the private sector, if three-quarters of businesses participate in the rollout, first-year costs could total over 45 billion euros, including 25 billion euros in upfront expenses. Despite these figures, the anticipated long-term reductions in administrative spending are expected to outweigh the initial investments.

The underlying technology and architecture of the European Business Wallet will be based on the EUDI-Wallet infrastructure, ensuring compatibility and interoperability across different systems. The solution is expected to offer robust cloud-based identity management, with wallet providers responsible for maintaining end-to-end cryptographic security between the application backend and user devices.

Technical standards and operational requirements for the wallet are being developed collaboratively by the European Commission, member states, and representatives from the private sector. Large-scale pilot projects are planned to validate the system and establish best practices ahead of full-scale deployment.

Before the European Business Wallet can be fully implemented, the proposal must receive approval from both the European Parliament and the Council of the European Union. If ratified, a two-year transition period will be provided for all public administrations within the EU to complete the necessary adaptations for supporting the digital wallet system.

This initiative is part of the broader Digital Omnibus Package, reflecting the EU's commitment to fostering digital transformation, enhancing efficiency, and supporting the single market through innovative technological solutions.