Understanding eIDAS Regulation

eIDAS is the most guessed term, as these services provide the necessary foundation for the support of secure online transactions beyond the borders of the European Union, thus enabling individuals, businesses, or governmental agencies to offer such services on a cross-border basis.

eIDAS plays a crucial role in the transformation of Europe into a Digital Single Market (DSM), which seeks to ensure the seamless online interactions of citizens and entities by introducing greater levels of interoperability across the electronic identification systems of different member states and by covering the provisions of trust services, including electronic signatures that are legally stringent. In the framework of eIDAS, the European Union seeks to facilitate cross-border transactions by allowing individuals to use their national eID to prove their identity when accessing other European Union countries, as well as allowing companies to make legal use of electronic payments without all the red tape-paperwork.

Mission and Objectives of eIDAS: Building a Trustworthy Digital Space

eIDAS was first presented in 2014 under the name of “Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market” and implemented throughout the European Union from July 1, 2016, the latter also cancelling the previous eSignatures. The creation of eIDAS was motivated by several objectives that aim at creating a safe and co-connected digital environment across the EU. Let us now consider the most fundamental objectives.

• Cross-Border eID Interoperability

  One of the main components of eIDAS is the ability to cross-edify eID systems across national boundaries. This framework of cross-border mobility allows a citizen from one EU country to utilize their national EID in accessing services of the government of another member country; thus, if fully resolved, it promotes digital mobility across the union. Consequently, citizens, expats, and even tourists can peruse medical education and financial services without geographical limitations.

• Providing Secure Digital Transactions

  One of the aims of eIDAS is to maintain protective measures during electronic operations, therefore making provision on the secure electronic identification and electronic trust services of advanced signature. It provides specifications on the various components, such as the electronic signature, seal, and timestamps used in the trust services, making sure such transactions are as good as the transactions done on paper.

• Advancement of the Digital Single Market (DSM)

  eIDAS is meant to enhance the optional single market by making electronic identification and trust services available in all Member States. The aim of the Digital Single Market is to eliminate structural barriers in the provision of services and selling of goods as well as in e-commerce. eIDAS puts in place a legal system as well as operational frameworks to allow citizens and businesses to conduct internet transactions without the fear of their geographical location within the European Union.

The Genesis of eIDAS: Overcoming the Hurdles of Disparate Systems and Conventional Modes of Operation

In the absence of eIDAS, the situation in the EU concerning digital transactions could be referred to as chaotic with member states adopting different stand alone, incompatible electronic identification systems and security measures. Such a scenario proved difficult, if not impossible, for individuals and organizations interacting with multiple borders, as there were long, tedious, and ineffective verification processes that lacked standardization in terms of security.

Aside from the operational difficulties, this scenario was also responsible for limiting the uptake of digital services and the conduct of e-commerce within the EU since transactions across borders were problematic for both businesses and individuals. By creating a unified legal framework, eIDAS was established to address these issues, bridging the gap between national systems and laying the foundation for secure, efficient, and standardized electronic interactions across the EU.

Main Concepts of eIDAS: Discussing Essential Trust Services

Apart from the identity and trust services introduced earlier, eIDAS also incorporates some core trust services:

1. Electronic Signatures

   Getting the approval and permission to proceed with a document or a transaction gives rise to electronic signatures, which are the digital equivalent of handwritten signatures. eIDAS also classifies electronic signatures into three categories, which offer varying degrees of security and legal implications:

   1. Simple Electronic Signature (SES)

      These are wet signature equivalents that can range from typing a name to pushing the ‘I Agree’ button. They are mostly unvalidated and possess very little legal significance.

   2. Advanced Electronic Signature (AES)

      AES signatures connect to the user but are tamper resistant and use their personal information, which they alone control to create unique signs. The signer possesses exclusive control over the private key utilized to create the AES.

   3. Qualified Electronic Signature (QES)

      The highest standard, QES, is equivalent to practicing a cursive signature. This must come from signing through a Qualified Signature Creation Device (QSCD) and a certificate from a qualified trust services provider (QTSP).

2. Electronic Seals

   Similar to a stamp, electronic seals provide secure verification of the proprietorship and authenticity of electronic documents, especially by corporations seeking to ensure the validity of some documents. A Qualified Electronic Seal is produced in accordance with regulations implementing qualified e-seal certificates, which are protected by a qualified signature creation device (QSCD).

3. Electronic Timestamps

   As for timestamps controlled under the eIDAS framework, they serve to confirm the existence of a document and its contents after a particular date. This is important in law and finance, especially when evidence of the existence of documents is presented as to the timing when certain documents existed in relation to a regulation or court proceedings.

4. Electronic Registered Delivery Services (ERDS)

   The Electronic Registered Delivery Services is a means of securing transmission of electronic data with a packet enabling sending, receiving, and confirmation of transactions. This service is frequently applied in high-end security sectors like banking where protecting the data from transmission is utmost.

5. Qualified Website Authentication Certificates (QWACs)

   A Qualified Website Authentication Certificate (QWAC) is a sort of electronic certificate that is outlined by the eIDAS Regulation, namely to verify the authenticity of a website, gaining more trust in the usage of the website by the showing of who exactly operates the website, therefore helping users from phishing, fraudulent sites, and other cybercrimes.

Role of Trust Service Providers (TSPs) under eIDAS

Trust Service Providers (TSPs) are crucial actors in the operationalization of trust services as defined by eIDAS. These services include the provision of digitalization elements such as electronic signatures and seals, which come with their own defined level of security. In order to maintain high trust levels, TSPs undergo thorough trust audits, and only the eIDAS-accredited ones are entitled to become Qualified Trust Service Providers QTSPs. These are trusting service providers that meet the EU eligibility criteria and are published in the EU Trust List, which allows entities and individuals to identify and engage in services from trusted TSPs.

Qualified TSPs are not only required to bear compliance costs, but they must also be subjected to a heavy degree of regulation and supervision, including by national regulators. This is because the very services provided by the QTSPs approval, which are of utmost importance for the provision of the electronic services, are very likely to be relied upon by the users in a court of law or other legislative bodies.

Trust Services in the Context of eIDAS: Their Legal Significance and Impacts

eIDAS has a wide range of importance, but perhaps the most important of them all is how it creates uniformity in the legal landscape pertaining to the digital practices in the entire territory of Europe. Many of the trust services that are used such as electronic signatures and seals, among others, have prescribed legal effects under eIDAS. Specifically, all services that are qualified have the same legal effect as that of their physical counterpart. This legal position helps in the fast integration of technology in various sectors, making it unnecessary to carry out activities in hard copies.

For example, it can be assumed that a qualified electronic signature (QES) is equivalent to a person’s signature which makes it legal for a business to sign binding contracts with parties in different states around the globe with no parties meeting face to face. Such standardization has eliminated most of the in-house meetings and the excessive documentation required, aiding in the efficiency of the business processes and the speed at which transactions are conducted.

Advantages of Compliance with eIDAS for Both Entities and People

The enforcement of eIDAS compliance brings a lot of advantages and covers many industries, such as banking, health care, and Internet commerce. A few of them are enlisted below.

• Efficiency of Operation and Cost savings

  eIDAS helps organizations cut down on administrative expenses that are incurred due to the use of paper processes. Steps in a transaction that previously required several stages, and wet signatures may now be executed entirely online, eliminating wastage of time and resources.

• Diminished Risks and Fraud Prevention

  eIDAS rather reduces the chances of fraud existing in any electronic commerce activities because it provides tough security measures for signing any legal document. Furthermore, there are several factors, such as the use of QTSPs and the application of trust service standards, that increase risk management in doing business.

• Nurtured Growth of Cross Border Transactions

  eIDAS provides for easy penetration and interaction between the member countries to facilitate the citizens and businesses filling out their services and transacting with such countries eID even when they are in a different member state. Thus, this eliminates borders and encourages the expansion of digital services as well as e-commerce.

• Legal Certainty and Transparency

  This hard-law approach that eIDAS adopts offers a standard across the regions allowing e-reporting users to understand the meaning of digital transactions devoid of doubt within the geographical ties of the European Union. Such endorsement of legal certainty enhances confidence and eases the processes of going digital fully without any paperwork involved .

Non-Compliance with the eIDAS

The following section discusses some of the major consequences of not adhering to the legal framework of eIDAS.

1. Legal Risks and Invalid Transactions

   Non-compliance can result in the invalidation of electronic signatures, making contracts and transactions unenforceable in legal proceedings. Organizations must ensure that they use Qualified Electronic Signatures (QES) to meet eIDAS standards for legal recognition.

   A case decided by the Court of Justice of the European Union in 2016 highlighted the risks of using illegal e-signatures in business contracts when the court held that an unqualified electronic signature could not be equated to a signing of a document with a hand-held signature.

2. Financial Penalties and Fines

   While eIDAS itself doesn’t impose direct fines, non-compliance can result in penalties from national regulators, especially if electronic identification or trust services fail to meet required standards. These fines can be substantial, especially when tied to broader regulations like GDPR.

   For not implementing proper eIDAS procedures to validate user identities, a Spanish firm was fined in 2021. That was also a breach of GDPR, which indicates the danger of eIDAS non-compliance in monetary terms.

3. Security Breaches and Fraud Risk

   Failure to comply with eIDAS guidelines for secure electronic identification and trust services exposes organizations to security breaches and fraud. Non-compliance can lead to the theft or alteration of sensitive data.

   In 2018, the financial institution based in Europe suffered a hack that was directly related to eIDAS and GDPR violations, leading to the leaking of sensitive information and financial data, leading to heavy penalties and claims for compensation by the organization’s clients.

4. Cross-Border Transaction Failures

   Non-compliant systems may be rejected by other EU member states, hindering cross-border transactions, and affecting international business operations. eIDAS ensures that electronic identification and signatures are recognized across the EU.

   In 2020, for instance, a German-based e-commerce business did not comply with eIDAS while using electronic signatures. Hence, it was not able to conduct business with French customers, resulting in the loss of businesses and affected international clients.

5. Reputational Damage and Loss of Trust

   Non-compliance can damage an organization’s reputation, leading to a loss of customer trust and business opportunities. Customers expect secure and compliant digital services, especially in regulated sectors.

   In 2019, a global document management services organization lost users due to the inability to launch e-signature services that are compliant with eIDAS, demonstrating how loss of customers due to non-compliance results in loss of reputation.

eIDAS 2.0: The Next Step of Digital Identification in the EU

In an era where digital transactions and online services are increasingly becoming a part of daily life, ensuring security, privacy, and trust in the digital ecosystem is of paramount importance. The European Union has recognized the need for a unified approach to digital identification and has introduced eIDAS 2.0 to address this challenge. This innovative policy aims to provide EU citizens with a secure and reliable digital identity, paving the way for safer digital interactions while empowering individuals to control their personal information.

• As a measure directed towards better safety and privacy of digital transactions, the European Commission presented a new policy called eIDAS 2.0 in 2021. The most important aspect of eIDAS 2.0 is the European Digital Identity EUDI Wallet, a digital wallet that is backed by the European government to keep the digital identities and credentials of individuals. The wallet will keep not only identity details but also other private data such as health records and banking details, among others, making it safe for an individual to access both public and private services.

• As it stands, 14 European member states have electronic ID modalities covering 59% of their citizens. It will come as no surprise, therefore, that by the year 2030, the European Commission would like to see 80% of the citizens of the EU having and actively using a digital ID thanks to eIDAS 2.0.

• It is in accordance with the provisions of GDPR since it stresses the consent and control of the individuals for their data, meaning every person has a right to choose how their data can be used.

• With the aid of The European Digital Identity (EUDI) Wallet, users can easily manage their personal details when participating in online transactions, thereby increasing the confidence of the users to transact digitally, which is in tandem with the concept of agency that has been advocated for by GDPR.

• Secondary, both frameworks are built upon the same conceptual background, providing for the availability of specific data security features to ensure the safety of personal data from unauthorized access and information breaches.

• eIDAS 2.0 facilitates the ability to share and use digital identities without compromising privacy by letting, among other things, requests for users accessing and requesting the erasure of their data, which is consistent with the principles of data protection by European regulation.

Key Features of eIDAS 2.0

eIDAS 2.0 envisions a few features to empower digital identity security and trust while giving users more control over their interactions with digital services within the EU. The updates prevent the security and versatility of digital identification from being compromised, bringing it into wider usage in various fields.

• Self-Sovereign Identity (SSI) Enhancements

  SSI enables persons to control what, when, and how much information they choose to share regarding their identities. For example, suppose a service only requires that a user’s legal age is above a certain limit. The said individual will only furnish the service with age confirmation and nothing else.

• Additional Trust Services

  In eIDAS 2.0, the scope of trust services is broadened to include additional ones like electronic archiving and add-on ledger services.

• The Interoperability for Both Public and Private Sector Compliant

  In eIDAS 2.0, standards are clearer for private sector compliance, which means that businesses can develop solutions that are secure and interoperable while protecting user information.

How can Encryption Consulting help?

Encryption Consulting provides specialized advisory services to help organizations achieve compliance with eIDAS (the EU regulation on electronic identification and trust services). Our services cover a broad spectrum of guidance, from secure digital identity management to adherence with stringent cryptographic standards required under eIDAS.

By conducting in-depth assessments, Encryption Consulting identifies an organization’s current compliance level and highlights areas for improvement. We assist in setting up Public Key Infrastructure (PKI) solutions tailored to eIDAS mandates, which ensure the secure issuance, management, and revocation of digital certificates. Additionally, Encryption Consulting offers expertise in implementing robust electronic signatures and seals that meet the advanced and qualified signature requirements outlined in eIDAS.

Our advisory services also extend to risk management and data protection protocols, which are critical for maintaining trust and regulatory alignment. Through thorough audits, training programs, and custom roadmaps, we help organizations manage the intricacies of eIDAS compliance. Real-world expertise enables Encryption Consulting to support clients with detailed compliance strategies, ensuring secure digital transactions across borders, reducing regulatory risks, and fostering a legally compliant environment for electronic interactions.

Conclusion

The eIDAS regulation has made it possible to conduct remote transactions in the EU within a common understanding of safe and legally acceptable electronic interactions. eIDAS has fitted and laid the foundational stones for the security of all the economic e-interactions within the region.

With the introduction of eIDAS 2.0 in a year, the EU is set to expand the reach of the existing framework and give citizens a single digital ID that will streamline and secure the use of online services in both the public and private sectors. The eIDAS Regulation, from this standpoint, is not only a legislative requirement, but it is also an integral part of the strategic plan for building a safe, effective, and cohesive digital single market in Europe.