iDenfy, a renowned provider of RegTech and fraud prevention services, has announced a significant update to its platform in response to the forthcoming European Union Digital Identity Wallet compliance regulations.
The update is designed for businesses that need to verify users through government-backed digital identity verification methods without requiring users to upload photographs of their ID documents. Instead, individuals will use familiar credentials they already employ for daily services, promising improved conversion rates through a simplified, non-document Know Your Customer (KYC) workflow.
Secure mobile application
The eIDAS 2.0 framework, under Regulation (EU) 2024/1183, mandates that all 27 EU member states provide at least one EU Digital Identity Wallet (EUDI Wallet) for citizens by December 31, 2026.
This regulation necessitates that banks, payment institutions, and electronic money organisations accept the wallet as a method for Strong Customer Authentication (SCA). The EUDI Wallet functions as a secure mobile app capable of storing verified credentials such as national ID cards and passports, eliminating the need for reverification each time a user accesses a new service. This regulatory framework was announced in May 2024.
Electronic ID verification flow
iDenfy's updated platform integrates both physical and electronic ID verification into a single session
iDenfy's updated platform integrates both physical and electronic ID verification into a single session, reducing friction for users and easing implementation for businesses.
A traditional document-first verification process can impede conversion, particularly in regions that have moved away from physical document verification. iDenfy reports a 23% decline in verification drop-offs when users cannot provide a physical document, and projects a 30% reduction overall by switching to electronic ID verification when issues like poor image quality arise.
Physical document verification
While regulatory compliance is pressing, many Nordic markets have already transitioned away from physical document verification. Systems such as BankID in Sweden and Norway, MitID in Denmark, and Smart-ID across Estonia, Latvia, and Lithuania, illustrate the shift. In these areas, requiring a photograph of a physical ID often disrupts sessions rather than facilitating them.
iDenfy offers an identity verification tool covering over 16,000 government-issued documents from more than 200 countries and territories. Its automated workflows manage diverse KYC processes, allowing clients to integrate components like facial recognition and age verification seamlessly, without needing additional coding. An internal compliance team operates continuously to handle cases outside automated parameters, ensuring no processes are delayed by weekends or holidays.
Beyond regulatory penalties
Businesses that fail in this respect risk legal and revenue losses during user acquisition
For financial institutions, non-compliance with wallet credentials could not only result in regulatory penalties but also hinder onboarding of EU users who primarily use wallet-based identification. Businesses that fail in this respect risk legal and revenue losses during user acquisition.
Global research by Fenergo indicates that companies spend $72.9 million annually on AML and KYC compliance, often losing customers due to inefficient onboarding processes. Adding wallet incompatibility only exacerbates this issue.
iDenfy CEO Domantas Ciulde emphasised, “The EUDI Wallet is not a future consideration for businesses in regulated markets; it is an immediate infrastructure question. Electronic IDs carry the same level of government-backed trust as physical documents, and in many cases, they are harder to forge. Our role is to make sure that businesses can accept both methods without rebuilding their onboarding system from scratch.”
iDenfy, a global RegTech and fraud prevention service provider, announced a major platform update ahead of the European Union’s Digital Identity Wallet compliance regulations for regulated businesses that require verifying users through government-backed digital ID verification methods, all without asking the user to upload an actual photo of their ID document.
That means users will be entering their credentials that they use for daily services already, which creates a familiarity factor. According to iDenfy, these newly launched non-doc verification workflows will help businesses increase conversions due to the simplified version of the standard, document-based Know Your Customer (KYC) process.
Secure mobile application
Under Regulation (EU) 2024/1183, the eIDAS 2.0 framework requires all 27 EU member states to make at least one EU Digital Identity Wallet (EUDI Wallet) available to their citizens by December 31, 2026, a binding legal obligation with no room for interpretation. Banks, payment institutions, and electronic money organisations have to operate under EU regulation, and now require accepting the wallet as a valid method for Strong Customer Authentication (SCA), due to direct compliance concerns.
The EUDI Wallet is a secure mobile application that can store verified credentials, including national ID cards, passports, and driving licenses in one place, so users won’t need to be asked to reverify every time they access a new service. This framework was presented in May 2024.
Electronic ID verification flow
To navigate businesses through this shift, iDenfy updated its platform with a combined physical and electronic ID verification flow. Rather than running separate processes, the integration handles both verification paths within a single session, and in this way, removes friction for the user as well as minimises implementation overhead for the business.
A purely document-first verification flow is, in practical terms, a barrier to conversion for a meaningful share of users in these regions. The data reflects this. iDenfy has recorded a 23% reduction in verification drop-offs among users who previously abandoned sessions because a physical document was not available, and projects 30% reduction to allow the system to automatically switch to the electronic ID verification workflow when a physical document capture fails due to poor image quality or lighting, or other minor issues.
Physical document verification
The challenge businesses face is not purely about regulation, though that pressure is real and immediate. Across the Nordic markets, the shift away from physical document verification has already happened at scale.
BankID is the dominant identity method in Sweden and Norway. MitID handles the majority of identity transactions in Denmark. Smart-ID is the standard across Estonia, Latvia, and Lithuania. In these markets, asking a user to photograph a physical ID card is increasingly the friction point that ends a session, not a standard step within one.
Identity verification tool
In general, iDenfy’s identity verification tool covers over 16,000+ government-issued documents across over 200+ countries and territories, with automated workflows handling different KYC processes as needed. Clients can choose various elements and combine their own onboarding process using elements like facial recognition, age verification, or passive liveness detection without ever needing to code. Cases that fall outside automated parameters are sent to iDenfy’s internal compliance team, which operates nonstop with dedicated day and night shifts, so reviews are not delayed by weekends or public holidays.
The second layer is a manual review conducted by iDenfy’s internal compliance team, available 24 hours a day, seven days a week. The company has day and night shifts to manage this process without any interruptions, such as holidays, weekends, or any specific days, to be able to catch edge cases, flag anomalies, and guarantee the most accurate outcome for every session. The combined flow is available to all iDenfy customers at no additional cost and can be enabled directly through dashboard settings, with no new integration work required.
Beyond regulatory penalties
For financial institutions, that means any onboarding or authentication flow that cannot process a wallet-based credential will be out of compliance. Likewise for fintechs, payment processors, and electronic money providers, the consequences of non-compliance extend far beyond regulatory penalties.
A business that cannot accept wallet credentials will be unable to onboard a growing segment of EU users who will fail with a wallet-based identification as their primary method. This can create legal exposure and a direct revenue loss at the point of user acquisition.
Inefficient onboarding flows
According to research from Fenergo, globally, businesses already spend $72.9 million per year on AML and KYC compliance, simultaneously losing clients due to inefficient onboarding flows. Adding wallet incompatibility to that equation compounds an already costly problem.t.
“The EUDI Wallet is not a future consideration for businesses in regulated markets; it is an immediate infrastructure question. Electronic IDs carry the same level of government-backed trust as physical documents, and in many cases, they are harder to forge. Our role is to make sure that businesses can accept both methods without rebuilding their onboarding system from scratch,” commented Domantas Ciulde, the CEO of iDenfy.
