Digital Identity

A digital identity credential is created through an identity verification process: a person verifies their identity once using government-issued documents and biometric checks (an eKYC process), and receives a digital credential from a trusted identity provider. This credential can be reused across services that accept credentials from that provider, without the individual repeating the full verification process each time.

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Digital identity frameworks define assurance levels that specify how strongly the identity has been verified. Under the EU's eIDAS regulation, three assurance levels apply: Low (basic authentication), Substantial (strong authentication with identity verification), and High (in-person verification or equivalent). Services requiring strong identity assurance specify the minimum level they accept, and the identity provider's credential carries a certified assurance level claim.

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eIDAS 2.0 (the revised EU Digital Identity Regulation, in force from 2024) mandates that EU member states provide citizens with a digital identity wallet: the EU Digital Identity Wallet (EUDIW). This wallet stores verified identity attributes (name, date of birth, address, nationality, driving licence, professional qualifications) and allows citizens to share specific attributes with services without revealing unnecessary information. Selective disclosure enables privacy-preserving identity sharing: a person can prove they are over 18 without revealing their exact date of birth.

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In the payments context, digital identity connects to payment authentication through FIDO2 and passkeys: a digital identity wallet can hold a FIDO2 credential linked to the verified identity, enabling single-gesture payment authentication that simultaneously confirms identity and authorises the transaction.

Digital identity addresses the fundamental inefficiency of repeated identity verification across services. Today, a person verifying their identity for a new bank account, a new payment provider, and a new e-commerce account must go through three separate identity verification processes presenting the same documents. A portable digital identity credential verified once and reusable across regulated services eliminates this redundancy, improving user experience while maintaining regulatory compliance.

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For payment providers, relying on digital identity credentials from trusted providers reduces the cost and friction of customer onboarding. Rather than performing full eKYC internally, a payment provider accepting a certified digital identity credential from a trusted issuer can onboard a customer in seconds, confident that the required identity verification has already been performed to the appropriate assurance level.

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Agentic commerce requires machine-readable, verifiable identity for AI agents. As AI agents make purchases on behalf of users, both the agent and the human principal need verifiable digital identity credentials: the agent's identity (proving it is a legitimate agent authorised to act) and the user's identity (proving who has delegated authority to the agent). Digital identity infrastructure is therefore foundational to the trust models of agentic payments.