Unveiling the future with Digital ID Wallets

As our lives become increasingly digital, how we use money, present identification documents and share personal information have also changed. Now, it is possible to store, manage and share personal identification data and credentials through technology, such as Digital Identity Wallets or ID Wallets.  

A digital wallet is a revolutionary concept, replacing physical documents with secure digital versions on smartphones, browser extensions or other devices. This shift towards digital identity management offers a glimpse into the future, promising unparalleled convenience and potential security benefits.

What is an ID Wallet?

As briefly mentioned above, an ID wallet can exist in different formats: a mobile app, a browser extension, or a hardware device. It allows you to securely store, manage and share personal data, credentials or other sensitive information, acting as a digital version of your physical wallet. So instead of storing your documents or any other tangible items like cash, it holds what we call digital attributes of that information.  

What can Digital ID Wallets do?

Digital ID wallets offer a range of functionalities that aim to streamline how we carry and use our credentials in the digital age. Here are some key capabilities:  

Secure Storage of IDs and Documents: Digital ID wallets can store verified copies of your driver’s license, passport, health insurance card, and other essential documents, which eliminates the need to carry physical copies everywhere, reducing the risk of loss or theft.

Simplified Access Control: Imagine using your phone to unlock your apartment building or gain access to secure areas at work. Digital ID wallets can hold electronic keys, allowing safe and convenient access control.

Streamlined Online Transactions: Digital ID wallets may store your credit or debit card information, allowing for secure online payments without having to manually enter the same details each time. This can accelerate online purchases and other transactions. 

Secure Online Verification: Digital ID wallets are a secure method for verifying your identity online, as they give higher assurance that the information provided is accurate and updated. This can be used for age verification, opening a bank account, loan application, or other situations requiring secure identification. 

Potential drawbacks of Digital ID Wallets

Digital ID wallets, while offering convenience, also raise concerns about data protection. Here are some of the expected negative impacts: 

Centralisation of Data: Digital ID wallets could centralise a vast amount of personal information in one place. This creates a single point of failure, making it a more attractive target for hackers.

Increased Risk of Data Breaches: A successful hack on a digital ID wallet provider could expose a massive amount of sensitive data, including IDs, financial information, and potentially even health records. This could have serious consequences for individuals whose data is compromised.

Exclusion and Accessibility Issues: Not everyone has access to smartphones or reliable internet connections. This could create a digital divide, excluding some individuals from the benefits of digital ID wallets and potentially affect their ability to fully participate in society.

Less Control over Personal Data: With digital ID wallets, users may have less control over how their data is used and shared. This could raise concerns about companies or governments using personal data for unintended purposes. 

Digital Wallet on the European Union 

The European Union is taking a proactive posture on digital ID wallets. Recently, the Digital Identity Regulation came into force (on 20/05/2024), and by 2026, all European Citizens and residents will be offered at least one EU Digital Identity Wallet, allowing them to access public and private services digitally and sign documents electronically all over Europe.

This means citizens will be able to use a single digital wallet app to store and manage their IDs and electronic documents, identify themselves safely when using digital services, and make secure online payments. This initiative aims to empower individuals with control over their data and streamline interactions with both public and private services within the EU. However, the EU also emphasises robust security measures and user privacy regulations to ensure the responsible implementation of this technology. 

The future of Digital ID Wallets 

Digital ID wallets represent a paradigm shift in how we manage our identities. They offer a glimpse into a future where physical wallets are a thing of the past, replaced by convenient and secure digital solutions. While concerns regarding data protection and accessibility remain, ongoing development efforts aim to mitigate these risks.

Ultimately, the success of digital ID wallets will depend on the balance between convenience, security, and user control over personal data. As technology matures and regulations evolve, digital ID wallets have the potential to revolutionise how we identify ourselves, interact with services, and navigate the ever-expanding digital landscape.

At LOQR, our main goal is to enable our clients to access digital services through ID Wallets. If you want to learn more about adding this feature to your or your customers’ daily routine, contact us and talk to our team of experts.