The European Payments Council (EPC) has launched SCARLET, an initiative to establish common rules for using EU Digital Identity Wallets in payment authentication, including interoperability and liability arrangements.
Short for Strong Customer Authentication Acceptance Rulebook and Liability Framework for EU Digital Identity Wallet Transactions, SCARLET was approved by the EPC Board on September 24 and announced publicly this week.
“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,” comments Giorgio Andreoli, Director General of the EPC.
“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.”
Alongside technical interoperability, the rulebook is intended to clarify contractual responsibilities and the allocation of liability among participating payment service providers and wallet providers.
The framework will support the consistent acceptance of EU Digital Identity Wallets by payment service providers (PSPs) when customers choose to use them for strong customer authentication. In the payments sector, the wallets are expected to provide an alternative way for customers to authenticate themselves when accessing accounts or initiating electronic payments.
The EPC says the initiative is intended to prevent fragmented implementations across more than 3,000 payment service providers and over 27 expected wallet providers in the EU and European Economic Area.
Development will be carried out by an EPC taskforce working with the European Commission and the European Banking Authority, alongside representatives from the digital identity ecosystem and other industry stakeholders.
“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,” Andreoli says.
SCARLET roadmap
The first version of the framework SCARLET 1.0 will focus on enabling compliance with existing payment regulations, including the Payment Services Directive (PSD2) and related strong customer authentication requirements.
A later version SCARLET 1.1 is expected to address requirements under the forthcoming Payment Services Regulation (PSR), helping participants prepare for future regulatory obligations expected to take effect from 2028 or 2029.
The framework will draw on technical work undertaken as part of the European Commission’s Architectural Reference Framework and related specifications for EU Digital Identity Wallets. The work aims to define the roles and responsibilities of participating organizations, establish eligibility requirements, and create interoperability standards. These help ensure that wallets and payment providers can work together consistently across the region.
The EPC plans to publish the first version of the SCARLET rulebook in December 2027 following a public consultation scheduled for summer 2027. After publication, participants will be given an implementation period to complete development, testing, onboarding and certification activities before the framework comes into operation.
The initiative follows an invitation from the European Commission’s Directorate-General for Communications Networks, Content and Technology (DG CNECT) and Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA).
Article Topics
digital payments | EU Digital Identity Framework | EU Digital Identity Wallet | Europe | European Payments Council (EPC) | interoperability | SCARLET | standards
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