EU Digital Identity Wallet for Business Security: Understanding the Foundation
The EU Digital Identity Wallet initiative is set to transform how businesses across Europe manage digital identities, security, and privacy. This article explores the foundations of security and privacy requirements for the Business Wallet, referencing eIDAS 2.0, EU guidelines, and the EUDI Wallet reference architecture.
Introduction
Digital transformation brings opportunities—and risks. For European businesses, adopting the EU Digital Identity Wallet offers a powerful leap forward in trusted transactions, seamless onboarding, and secure digital interaction. But trust must be built on security and privacy. What are the foundational security and privacy measures behind the Business Wallet? How do these align with EU values and regulatory frameworks?
Why Security & Privacy are Fundamental in Digital Identity
The cornerstone of any digital identity solution is user trust. For companies, trust means knowing their transactions, employee identities, and business data are secure from unauthorized access and misuse. GDPR, eIDAS 2.0, and the EUDI (European Digital Identity) Wallet architecture all reinforce the principle that security and privacy must be designed from the start—not added as an afterthought.
Key Goals for the EU Digital Identity Wallet
- Security by Design: Across all layers—from user device to backend verification services, the architecture prioritizes risk mitigation, credential protection, and reliable authentication mechanisms.
- Privacy by Default: The EUDI Wallet ensures that only necessary information is processed and shared, upholding the minimization and proportionality principles enshrined in EU law.
- User Control: Businesses and individual users must have the ability to review, consent to, and manage sharing of their digital credentials.
eIDAS 2.0 and Security Requirements
eIDAS 2.0 builds on the foundations of the previous eIDAS Regulation (Regulation (EU) No 910/2014), introducing new standards for the EU Digital Identity Wallet. Notably, it prescribes:
- High LoA (Level of Assurance): The Wallet must enable strong user authentication, typically with multi-factor authentication (MFA), biometric checks, or secure hardware.
- Qualified Trust Service Providers (QTSPs): Only authorized providers may issue, manage, or revoke digital credentials.
- End-to-End Encryption: All data exchanged between Wallets, service providers, and government authorities must use robust encryption.
The reference architecture EUDI-ARF clearly specifies threat models, risk assessments, and required security controls. Wallets must undergo regular conformity assessments.
Security Architecture: How the Business Wallet Protects You
At the technical level, the Business Wallet implements several layered controls, including:
1. Strong Authentication
- Passwordless logins (e.g., biometrics, device-bound credentials)
- Support for European standards such as eIDAS-compliant signatures
2. Data Minimization
- Businesses only disclose the attributes required for a specific transaction (e.g., company address, VAT number).
- Anonymous or pseudonymous credentials can be used when possible.
3. Secure Element Storage
- Sensitive keys and credentials are stored in secure elements (TEE, HSM) on devices, reducing exposure to hacking.
4. Verifiable Credentials and Proof Control
- Credentials adhere to W3C VC data formats, supporting selective disclosure (show only what's needed).
5. Continuous Monitoring and Conformance
- Wallet providers must demonstrate ongoing compliance with EU technical specifications and undergo independent audits.
Table: Core Security Controls in the EU Digital Identity Wallet
| Control Area | Description | EU Reference |
| Authentication | Strong, multi-factor, and biometric options | eIDAS 2.0, EUDI-ARF Ch. 4 |
| Data Storage | Credentials in secure element/HSM | EUDI-ARF Sec. 5, GDPR Art. 32 |
| Selective Disclosure | Present only necessary attributes | EUDI-ARF Sec. 2.2, GDPR Art. 5 |
| Encryption | End-to-end for all sensitive communications | eIDAS 2.0, NIS2 Directive |
| Consent Management | Explicit consent before sharing data | GDPR, EUDI-ARF Ch. 3 |
Privacy: Enabling Business without Compromising Confidentiality
Privacy is more than hiding information—it’s about giving users control and transparency. EU Digital Identity Wallet design addresses:
- Data minimization: Only required business information is shared.
- Transparency: Clearly informing businesses and users what is shared, with whom, and for what purpose.
- Auditability: Keeping logs of credential usage and transmissions.
- Granular consent: Allowing businesses to approve each disclosure or use pre-approved policies.
Eurostat surveys show that 38% of EU enterprises with 10+ employees encountered security incidents in 2022—emphasizing why robust, standardized wallet solutions are essential to safeguard business assets.
Business Wallet in Action: EU Examples
- Cross-border e-invoicing: Companies in Italy and Germany can authenticate their VAT numbers and instantly verify business details across borders with the Business Wallet, streamlining compliance.
- SME onboarding: An SME in France can use the Wallet to register with government agencies, provide financial credentials, and obtain permits without repeatedly submitting sensitive paperwork.
- Procurement and B2B contracts: Secure digital signatures using eIDAS-compliant credentials are legally recognized and offer high assurance across the EU.
For more on business applications, see How Digital Identity is Powering Business Applications Across Europe.
Challenges and Future Directions
Key open questions remain:
- How to keep credential revocation and updates seamless without privacy leakage?
- How SMEs with limited IT resources can meet wallet integration requirements?
- What new cyber threats will emerge, and how can the Business Wallet rapidly adapt?
EU initiatives such as the Digital Europe Programme and NIS2 Directive address continuing challenges in resilient digital infrastructure. Collaboration among Member States, ongoing technical improvements, and business stakeholder engagement will ensure the Business Wallet remains a secure, user-centric solution.
Conclusion
Security and privacy are not just features—they are foundational to the trust and success of the EU Digital Identity Wallet for businesses. Every step, from core architecture to end-user interfaces, must adhere to the highest standards set by EU law and technical guidelines. Businesses looking for sustainable growth, easier compliance, and trusted digital operations should explore the Business Wallet and its robust security measures.
Ready to secure your business for the digital future? Learn more about best practices in Staying Ahead: Best Practices for Security & Privacy with the EU Digital Identity Wallet.