A proxy authentication method and apparatus is described for use in user authentication, e.g. for payment transactions.The authentication is carried out before the transaction between a electronic, e.g. digital identification device and a person terminal. Verification information is entered at the personal terminal to authenticate the user and if this is successful a verification flag is set in the digital identification device.The status of this flag, or an encrypted version thereof can be used by a transaction terminal of evidence that the user has been authenticated without having to transmit any secret identification information to the transaction terminal.