Digital Wallets for an Economy of Trust

We have increasingly been using applications on our mobile devices for everyday payments. In recent years, Apple and Google revolutionised the way we were using our phones for making secure digital payments, but without being aware, people had been using digital wallets long before then.

The beginnings of digital wallets were modest, initially storing different access passes, membership cards, coupons, or airplane boarding passes that still had to be visually checked by a human or provided a simple code for a machine scan. Nowadays, digital wallets are mostly associated with card payments and in some cases for managing crypto assets.

Use cases are however not limited to financial transactions. Developments of decentralised identity (DID) technology have expanded the use of digital wallets. In fact, digital ID is the foundation of all other possible digital services.

Digital ID is the foundation of all our future digital services

The web as we know it now is dominated by large platform-centric services (Amazon, Google) provided in exchange of personal data (Web 2.0). As the industry moves away from usernames and passwords as the defacto standard for authentication on websites and in digital transactions, wallets provide a user-centric approach for storing and managing private keys used for identification and authentication.

With the advent of verifiable credentials (VCs) as the most important artefact of decentralised identity, digital wallets can now be used to store and manage non-financial information, such as educational qualifications, professional certifications, and even government-issued identification. Verifiable credentials allow for the exchange of information in a trusted framework, between public administrations, citizens, and businesses. A recent study from Gartner indicates that over 30 per cent of national governments will provide digital wallets for identity for mobile phones by 2024. [1].

Verifiable credentials prove that “I am me” or “You are you” as the Holder. They are a digital version of a person’s identity card or qualification certificates, with all the entitlements that they may bring. VCs are digitally signed by the organisation or institution as the Issuer. Verifiable credentials are also instantaneously verified by third parties, be they governments or any other public or private organisation. Verifiable credentials represent every aspect of “My life”, — My Education, My Work, My Health – and can include my driver’s license, my diplomas, or my employment certificates. By storing these credentials in a digital wallet, individuals have greater control over their personal information and can easily share with a Verifier only what is necessary in terms of data.

Verifiable credentials reduce fraud and increase trust in digital interactions

One of the major advantages of verifiable credentials is the ability to reduce fraud and increase trust in digital interactions. Traditional paper documents are not only easy to fake, but indeed difficult to verify in online transactions, not to mention the very poor user experience with media discontinuity. With verifiable credentials, the authenticity and integrity can be easily verified through a digital signature or other cryptographic techniques.

Another advantage of this technology is streamlining processes like customer onboarding for online services. It follows the KYC principle, to automate and optimise otherwise inefficient and manual business processes. For example, in the onboarding process, instead of providing multiple forms of identification, an individual can simply share all required data attributes from various digital credentials in “one tap” which can be verified by the receiving organisation in real-time. This not only saves time but also reduces the potential for errors and increases security.

However, as with any other innovative technology, digital wallets also raise concerns about data privacy and security. Digital wallet providers must ensure that personal information stored in the wallet is protected against unauthorised access and breaches. Holders or individuals should be aware of the risks and take steps to protect their digital wallets and the information stored within, just like they protect their physical wallets or mobile devices.

The use of digital wallets for payments and identification is on the rise. We are witnessing how European Union is redefining its eIDAS framework with the introduction of European Digital Identity Wallet (EUDI Wallet) which is intended to be used by all Europeans across the EU member states in both public and private sector as early as 2024/2025 [2]. As technology continues to advance and is adopted by society, it is likely that digital wallets will become a trusted starting point for every digital interaction in our digital lives.

[1] Gartner Unveils the Top 10 Government Technology Trends for 2022

[2] Commission proposes a trusted and secure Digital Identity (