On 24 September 2026, the Board of the European Payments Council (EPC) approved the start of the development of SCARLET (Strong Customer Authentication [SCA] Acceptance Rulebook and Liability Framework for EUDIW Transactions), a new standardisation framework designed to support the consistent acceptance of EU Digital Identity Wallets by payment service providers (PSPs) in the context of SCA.
EU Digital Identity Wallets are intended to allow citizens and residents across the European Union to identify themselves and provide verified information digitally. In the payments sector, they allow for new means for customers to authenticate themselves when accessing a payment account or initiating an electronic payment.
In this context, the SCARLET initiative responds to the increasing market interest in digital identity in the context of payments services, and to the forthcoming regulatory obligation under Regulation (EU) 2024/1183 (eIDAS 2.0) for PSPs to accept EU Digital Identity Wallets for SCA, when end-users choose to use them.
SCARLET is intended to reduce the risk of multiple, potentially non-interoperable approaches emerging across Europe by providing a common standard for the 3.000+ PSPs and the 27+ EU Digital Identity Wallet providers expected to operate in the EU/EEA.
As part of the SCARLET scheme, the EPC plans to develop:
- A business and contractual framework defining scheme actors, eligibility requirements, rights and obligations of the legal entities participating to the scheme.
- Common functional and operational rules.
- Technical specifications, relying on the work already done by the European Commission with the Architectural Reference Framework (ARF), the related technical specifications (TS12) and considering the contribution of Large-Scale Pilots (LSPs).
The initial version of the scheme, SCARLET version 1.0, will focus on the acceptance of EU Digital Identity Wallets by PSPs under the existing Payment Services Directive, the PSD2, the European Banking Authority (EBA)’s existing Regulatory Technical Standards for SCA, applicable level 2 legislation, and other regulatory guidance provided. The EPC will subsequently develop an updated version, SCARLET version 1.1. This will extend the SCARLET framework to the forthcoming Payment Services Regulation (PSR), in due time to secure compliance of participant PSPs with the PSR from 2028/29 onwards, and allowing them to preserve previous investments.
Giorgio Andreoli, Director General of the European Payments Council, said:
“EU Digital Identity Wallets will provide to European end-users an alternative way to safely and conveniently authenticate when accessing payment accounts and using payment services. As set out by the European Digital Identity Framework Regulation, wallets and payment services providers must be able to interact consistently across Europe, and this will be a challenge due to the sheer number of these actors. Through SCARLET, the EPC aims to bring market participants and public authorities together around a common set of contractual, business and technical interoperability rules, with a clear allocation of responsibility. Our objective is to support innovation while avoiding fragmented implementations that would add complexity and costs for payment service providers, wallet providers and European citizens.”
The EPC decision to develop the standardisation framework is in response to an invitation by the Directorate-General for Communications Networks, Content and Technology (DG CNECT) and the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) of the European Commission (EC). The development will be performed by an EPC Taskforce in close collaboration with the European Commission and the European Banking Authority. Representatives of the EUDI Wallet ecosystem and other relevant industry stakeholders will also be involved through an EPC multi-stakeholder group.
The EPC intends to publish the first version of the SCARLET 1.0 rulebook in December 2027, following an open consultation scheduled for summer 2027. As currently envisaged, the SCARLET 1.0 scheme will enter into effect after an implementation period allowing participants to complete development, testing, onboarding and certification activities, at the same time also allowing PSPs’ compliance with the European Digital Identity Framework regulatory deadline.
Source: European Payments Council
