The European Payments Council has approved SCARLET, a planned scheme to standardise how PSPs accept EU Digital Identity Wallets for SCA.
The Board of the European Payments Council (EPC) has approved the development of SCARLET (Strong Customer Authentication Acceptance Rulebook and Liability Framework for EUDIW Transactions), a framework to support consistent acceptance of EU Digital Identity Wallets by payment service providers (PSPs) for Strong Customer Authentication (SCA). The wallets allow EU citizens and residents to identify themselves and share verified information digitally, and offer a new way to authenticate payments. SCARLET also responds to the eIDAS 2.0 Regulation (Regulation (EU) 2024/1183), which will require PSPs to accept the wallets for SCA when users choose to use them.
Avoiding fragmented implementation
SCARLET aims to reduce the risk of multiple, potentially non-interoperable approaches emerging across Europe by providing a common standard for the more than 3,000 PSPs and more than 27 EU Digital Identity Wallet providers expected to operate in the EU and EEA. The scheme will include a business and contractual framework defining participants, eligibility requirements, and their rights and obligations, as well as common functional and operational rules. Its technical specifications will build on the European Commission’s Architecture and Reference Framework and related technical specifications, taking into account the results of the large-scale pilots.
Giorgio Andreoli, Director General of the EPC, stated that EU Digital Identity Wallets will give European users an alternative, secure, and convenient way to authenticate when accessing payment accounts and services. According to Andreoli, the regulation requires wallets and PSPs to interact consistently across Europe, which will be challenging given the number of participants involved. He added that SCARLET aims to bring market participants and public authorities together around common contractual, business, and technical rules with a clear allocation of responsibility, avoiding fragmented implementations that would increase complexity and costs.
Versions and timeline
SCARLET version 1.0 will focus on wallet acceptance under the existing Payment Services Directive (PSD2), the European Banking Authority’s Regulatory Technical Standards on SCA, and related legislation and guidance. Version 1.1 will extend the framework to the forthcoming Payment Services Regulation (PSR), supporting participants’ compliance from 2028 or 2029 onwards while preserving their earlier investments. The framework is being developed by an EPC taskforce in collaboration with the European Commission and the European Banking Authority, following an invitation from the Commission, with wallet providers and other stakeholders involved through a multi-stakeholder group.
The EPC plans to hold an open consultation in summer 2027 and publish the first SCARLET 1.0 rulebook in December 2027. The scheme will then take effect after an implementation period allowing participants to complete development, testing, onboarding, and certification, in line with the regulatory deadline under eIDAS 2.0. By defining liability as well as technical rules, SCARLET is intended to settle questions of responsibility between PSPs and wallet providers before wallet-based authentication is deployed at scale.
