In January, the UK government announced the launch of its GOV.UK Wallet, which is set to roll out this summer. The digital wallet will allow residents to access versions of their driver’s licences and veteran ID cards, enabling them to verify their identity from their phones.
Tony Craddock, Director General of The Payments Association (TPA), sees this as a significant step forward. Speaking to Payment Expert, he says the announcement is: “confirmation that the government is ready for it.”
A complicated history
However, as Craddock explains, the journey to digital identity in the UK has been long and complicated. It dates back to 1994 when former Prime Minister Tony Blair introduced the Identity Card Act. Despite years of efforts and government sponsorship, adoption proved challenging.
“It was a disaster. So it just wasn’t going to be adopted, and so in the end, after several hundred million pounds worth of investment and a lot of time, they canned the idea and it’s been a political hot potato ever since,” Craddock explains.
Fast forward to 2025, and the concept of digital identity has not only been revived but is now being put into action, perhaps proving that Blair was ahead of his time. However, several key factors are driving its success this time around.
One major reason, Craddock believes, is that without a reliable digital identity system, the adoption of crucial financial innovations in the UK is being held back.
He points to programmable money, real-time international payments and secure Open Banking transactions as examples of innovations that require a strong digital ID framework. “That’s where this sort of digital identity is going to be necessary,” he says.
Another key factor is the growing threat of fraud, which was a hot topic in the UK last year with a rise in Authorised Push Payments (APP) fraud and subsequent controversial regulations around reimbursements.
Craddocks states that digital identity can help prevent financial crime by verifying that recipients of payments are not money mules or individuals with a history of fraudulent activity. He emphasises that even “innocent bad actors” – those unknowingly involved in scams – can contribute to the problem.
He tells Payment Expert: “For us to have a digital identity, it’s going to really help to solve the fraud problem.”
Playing politics with digital ID?
While digital identity brings clear benefits to the payments industry, Craddock believes the government must also highlight its broader macroeconomic advantages to drum up support for its adoption.
One of the most politically significant, he explains, is its potential to deter illegal migration. Acknowledging that it’s a “sensitive topic but very politically attractive”, he argues that digital ID can ensure only legally authorised individuals secure employment.
Currently, people can use a National Insurance number that might belong to someone who is no longer working. With a verified digital identity the UK would become less attractive to those attempting to work illegally.
Beyond immigration and employment practices, digital identity could also help combat tax avoidance. Craddock says this technology could help authorities collect revenue from those who currently evade taxes.
“So for those two reasons – the financial services reason and the broader political reason – the time is right for a digital identity,” Craddock states.
“That’s why the government, through its Data Use and Access Bill, which is going through Parliament and about to be finalised, and through its GOV.UK Wallet, has actually been quietly pushing this behind the scenes and it’s terrific. It’s terrific news.”
Additionally, he also highlights the growing pressure for the UK to keep pace with Europe’s digital identity developments. The European Union is moving ahead with its own framework, aiming to provide all citizens with a secure, unified digital identity by 2030. This has cemented the EU as the global leader in digital ID adoption and regulation.
“We can’t really be left behind anymore. We really can’t,” Craddock emphasises.
This looming competition adds urgency to the UK’s efforts, with Craddock suggesting that the government’s push for digital identity is as much about global competitiveness as it is about modernising domestic systems.
Despite the clear benefits and essential roles enabled by digital identity, some may still be hesitant, particularly those who distrust the government with their data. However, Craddock doesn’t see this as a major obstacle, given how much digitisation has already taken place.
There are two reasons why adoption will be smooth, he argues. Firstly, people are already using their phones as a form of identification in many aspects of daily life.
“80% of us are using this phone to get access to transportation, to make payments, to enter a nightclub, to get into our gym, to pay for subscriptions,” he explains.
With digital wallets already holding payment cards and other credentials, adding a government-backed ID would be a natural extension. He adds: “We’re familiar with it. It’s not going to be a big change in behaviour.”
That said, adoption won’t happen overnight. Craddock believes two things are necessary to encourage uptake: educating people on security and incentivising them with convenience.
He illustrates this with a personal anecdote: “Now, I’m old-fashioned — I still carry a card wallet. But my most valuable attribute is my over-60s Oyster card, which isn’t digital yet. The reason is simple: if I added it to my Apple Wallet, Oyster would be charged every time I used it. But because it’s a closed-loop system, I can tap in without paying. That’s the only free thing I get, so I keep it in my wallet. Other than that, I see no reason to carry one anymore.”
Conversations “we need to have”
This example highlights that digital identity isn’t just about convenience; it’s also about ensuring fairness and access. Craddock knows that adopting new technologies requires careful thought about how those who prefer analogue systems will be affected.
He says: “What do we do with people who love to pay by cash? Well, they pay by cash. And what about those who don’t want their identity to be digital? Well, they use analogue identifiers. That’s their choice.”
However, TPA’s General Director points out that the real question is whether society will be willing to accept the exclusion of those who opt out of digital identity. “That’s a conversation we need to have – one that involves ethics, financial inclusion, and other considerations,” he adds.
These aren’t abstract concerns, however, they have real-world consequences for those who might find themselves left behind in an increasingly digital society. This is a problem the payments industry is already facing regarding high-street bank closures, for example, something which has caught the government’s eye as well.
Ultimately, Craddock stresses that education will play a crucial role in overcoming these challenges.
He concludes: “In the end, we should be educating people that it’s a more secure, safer, easier and more convenient way to identify yourself.” By focusing on these benefits, he believes the public will be more likely to embrace digital identity, provided they feel informed and confident in its security.”
