Two recent posts by well-known payment processing voices highlight contrasting approaches to the future of digital wallets. David Birch, a digital financial services thought-leader, and the EU Digital Wallet Consortium (EWC) have each presented very different visions of how digital wallets are developing. Birch presents commercial interests and consumer behavior as most interesting, whereas the EWC highlights a production-level success of regulatory frameworks and cross-border standardization.
Commercial Battlefields: Winner Takes All
In Birch’s March 26, 2025 post, “What Are Digital Wallets? And Why Are They A Big Deal?” he suggests digital wallets are a commercial battleground, where major tech companies are placing “their tanks on the banks’ lawn,” forcefully encroaching on financial institutions’ territory with comprehensive digital wallet offerings. This is a bit like if IBM had tried to force proprietary network protocols on financial institutions to do business (they did, look up Token Ring let alone X.25 and how and why they lost to open standards of Ethernet and TCP/IP).
What Birch doesn’t fully emphasize is that this isn’t just tech companies versus banks—it’s also tech giants fiercely competing against each other to eliminate competition entirely. Apple Wallet and Google Wallet are engaged in an existential struggle for total market dominance, with each seeking to establish their own ecosystem as the default standard with no reason or expectation that they would settle with competition existing in any form or fashion.
There’s no cooperation seen or perceived, which is obvious to anyone in any group with an Apple and Google device trying to compare and share wallets. The commercial enemies are fighting a zero-sum game where increased adoption of one wallet likely comes at the direct expense of the other.
With this in mind Birch defines the strategic value of wallets not just in holding financial data but in identity management tied to that data (like a driver’s license for your credit card): “Ultimately, then, wallets are about organising identity, not money.” This perspective positions digital wallets as foundational for commercially-controlled movement and access within society, far beyond the exchange of goods or services related to such movements. Imagine oligarchs eager to force you to live only inside their hamster wheel, where they make a penny every step you take.
The commercial vision Birch presents is of course one where he believes competition drives innovation, with wallet providers fighting for a slice of a rapidly growing pie—”digital transactions grow from $9 trillion in 2023 to an estimated $16 trillion over the next five years,” according to his cited research. His views reflect a common American misbelief, one that overlooks how competition success leads to rapid stagnation once market “dominance” is achieved. Innovation really is the inverse to competition, it is the child of regulation that spurs people to collaborate instead of crush ideas that might challenge dominance.
Innovations from Regulations: Collaboration Through Standards
Consider therefore, in stark contrast, the EU Digital Wallet Consortium’s post from two weeks ago that announces a milestone achievement: “First Real Payment Using the EU Digital Identity Wallet.” This post celebrates a successful cross-border transaction using an EU-sanctioned digital identity wallet, where a Romanian bank’s Visa card was used to purchase a Greek ferry ticket through the iGrant.io wallet.
The EWC’s vision is fundamentally regulatory-driven innovations, emphasizing standardization, interoperability, and cross-border functionality within Europe’s distributed and representative regulatory landscape. Their announcement focuses on proving that “specifications developed by the EWC payment task force work in a production environment.”
Two Contrasting Approaches
| Birch’s Commercial Vision | EWC’s Regulatory Vision | |
|---|---|---|
| Foundation | Built for commercial advantage and market capture | Built on identity verification and public interest |
| Competition Model | Zero-sum game with tech giants seeking to eliminate rivals | Collaborative development with multiple stakeholders |
| Innovation Source | Claims market competition drives innovation | Positions regulation as the true driver of innovation |
| End Goal | Market consolidation around a single dominant player | Interoperable ecosystem serving citizens across borders |
Is There an Innovation Paradox?
Birch’s position represents a common Silicon Valley ideology that competition naturally produces innovation. Yet history tells a different story, especially when you consider there would never have been a Silicon Valley without unlimited federal dollars pouring into it during WWII to create a tech industry. Once market dominance is achieved by a corporation, technology often stagnates as dominant players see more value in protecting a position and squeezing consumers for margins rather than investing or continuing to innovate.
Microsoft’s monopolistic efforts to exert unnatural browser dominance led to years of stagnation in web standards until Firefox and Chrome emerged as competitors, thanks to regulations, and rulings against Microsoft.
The EU approach recognizes this as more than a paradox, but rather as the logic of regulation. It’s as common sense as having referees in a football game, to ensure law and order of a fair playing field. By creating frameworks that mandate interoperability and protect consumer interests, they create space for genuine viable innovations to serve public needs rather than merely advancing unregulated and unfair corporate dominance. It’s like saying bridges should be measured as viable only when they ensure safe traffic across a gap, and not on the basis of tolls collected until it collapses.
Future of Digital Wallets
As these two approaches collide, we’re likely to see increasing tension between commercial wallet providers trying to establish walled gardens and regulatory efforts to ensure open standards. For consumers, the question becomes: do we want our digital identity controlled by a single corporate entity with the biggest tanks that won at the “wallet wars,” or managed through transparent, democratic processes that ensure no single entity becomes too powerful?
The EWC milestone suggests that regulatory-driven innovation can deliver functional solutions that prioritize user needs over corporate profits. Meanwhile, the commercial battle continues unabated, with each tech giant seeking to become the one wallet to rule them all.
What’s clear is that digital wallets are no longer just about payments—they’re about who controls the infrastructure of our digital identity. And that makes the choice between these competing visions not just a technical matter, but a profoundly political one. As digital wallets become the access points for everything from financial services to government benefits, the model we choose today will shape power dynamics in the digital economy for decades to come.