Finanza & Investimenti

Next - Voices from the future | From barter to Digital Wallet: between payment systems and new identification models

Next - Voices from the future is a journey into the world of innovation. With a new programming, every two weeks. In this new post by Filippo Chiricozzi, Innovation Team of Banca Sella, we talk about the evolution of payment systems
Next, voci dal futuro | Dal baratto al Digital Wallet: tra sistemi di pagamento e nuovi modelli di identificazione
Getty Images
Filippo Chiricozzi

Banca Sella Innovation Area

Payment systems have undergone extraordinary evolution over the centuries. From the use of shells as currency in primitive societies, through gold and silver coins in antiquity, to the birth of banks and the introduction of banknotes, the concept of money and payment has continually transformed. With the advent of digital technology, we have entered a new era where payments can be made quickly and securely via the internet and mobile devices.

Today, digital payment systems have become an integral part of our daily lives. Methods such as credit cards, online bank transfers, electronic wallets, and cryptocurrencies have made payments more convenient and accessible. Additionally, smartphones have introduced so-called digital wallets, which can hold credit and debit cards, as well as other loyalty cards. Among the most well-known digital wallets are Apple Pay and Google Pay, which allow users to make secure payments with their smartphones. These systems represent just the beginning of an era where digital payments will become increasingly integrated with other digital services, including those for user identification. 

The aforementioned wallets from the most well-known smartphone companies are among the most widely used digital wallets globally. Both offer the ability to store credit and debit cards in their systems, enabling contactless payments via smartphone or smartwatch. Security is a central element: both services use tokenization technologies that replace sensitive card data with a unique identifier, making it more difficult for fraudsters to access the information.
Apple Pay is deeply integrated into the Apple ecosystem, offering a smooth and intuitive user experience. It allows payments in physical stores, apps, and websites, using Face ID or Touch ID for authentication. Google Pay, on the other hand, is known for its flexibility and compatibility with a wide range of Android devices. Besides payments, Google Pay also allows users to send money to each other, store event tickets, and loyalty cards.

These digital wallets represent a growing trend toward the adoption of contactless payment technologies, which offer not only convenience but also greater security compared to traditional payment methods.

Not just payments, however. The European Union is making great strides toward digitization and the security of its citizens' data. One of the most significant initiatives in this context is the introduction of the European Digital Wallet within the eIDAS 2 (electronic IDentification, Authentication, and trust Services) framework. The eIDAS 2 regulation aims to provide a clear and secure legal framework for digital identification and electronic trust services in the EU. This update to the existing rules intends to strengthen trust in cross-border digital services and facilitate access to a wide range of public and private services throughout Europe.

The European Digital Identity (EUDI) Wallet is an ambitious EU project aimed at providing European citizens with a digital wallet containing all their identity documents. This wallet, similar in some aspects to the Italian SPID system, will allow citizens to store and use documents such as the electronic ID card, passport, voter card, driver's license, and health card. In addition to this, it seems that the EUDI wallet will also allow for payment management, probably through the Digital Euro (which we have previously discussed).

The advantages of the EUDI Wallet are several, including:

  • Accessibility and Convenience: Users will always have their essential documents at hand, eliminating the risk of losing or forgetting them.
  • Security: The infrastructure will be protected against fraud and identity theft, ensuring a robust authentication system.
  • Versatility: It will enable a wide range of operations, such as paying taxes, signing contracts, opening bank accounts, and checking into hotels.
  • Interoperability: Documents will be recognized in every European country, simplifying travel and cross-border interactions.

The EUDI Wallet project is in an advanced stage. After starting work in 2021 and concluding negotiations in November 2023, the EU plans to establish all technical specifications within 6-12 months. The official launch and initial testing will likely begin in 2024, with full implementation expected by 2025. 

Thus, a promising future awaits digital wallets, which will represent a new model for customer data management and play a key role in the evolution of future banking payments.

Share and participate to the discussion