European Payments Council launches SCARLET initiative supporting EU Digital Identity Wallets in payment authentication
EPC launches SCARLET initiative to support consistent use of EU Digital Identity Wallets in payment authentication, and secure
PSPs compliance with forthcoming European Digital Identity Framework Regulation (eIDAS 2) obligations.
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.
