EPC Launches SCARLET to Standardize Digital Identity Wallet Use Across EU

The European Payments Council (EPC) has launched an initiative to develop a standardized framework for accepting EU Digital Identity Wallets in payment authentication, helping payment service providers prepare for obligations under the EU’s updated eIDAS 2.0 digital identity regulation.

The Strong Customer Authentication Acceptance Rulebook and Liability Framework for EUDIW Transactions (SCARLET) aims to prevent incompatible approaches emerging across more than 3,000 payment service providers and at least 27 wallet providers expected to operate in the EU and European Economic Area.

EU member states must make digital identity wallets available by the end of 2026. These apps will allow users to prove their identity, store documents, and share verified information when accessing public and private services across the bloc.

SCARLET will establish participants’ rights and obligations, common operational rules, and technical specifications. Its initial version will support wallet acceptance under the revised Payment Services Directive (PSD2) and existing strong customer authentication standards. A subsequent update will address the forthcoming Payment Services Regulation.

Giorgio Andreoli, Director General of the EPC, said:

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 plans to consult publicly on the framework in the summer of 2027 and publish its first rulebook in December 2027. An implementation period will follow, allowing participants to complete development, testing, onboarding, and certification before the scheme takes effect.

An EPC team will develop the framework alongside the European Commission and the European Banking Authority, with input from wallet providers and other industry stakeholders.