EPC Launches SCARLET to Standardise EU Digital Identity Wallet Acceptance for Payments

The European Payments Council has initiated the development of SCARLET, a standardisation framework for EU Digital Identity Wallets. For fintech professionals, this establishes the rules for how over 3,000 payment service providers must accept digital IDs for Strong Customer Authentication, ensuring cross-border interoperability and regulatory compliance under the forthcoming eIDAS 2.0 mandate.

What was announced

The SCARLET initiative (Strong Customer Authentication Acceptance Rulebook and Liability Framework for EUDIW Transactions) was approved by the Board of the European Payments Council (EPC) on 24 September 2026. It serves as a direct response to Regulation (EU) 2024/1183, known as eIDAS 2.0, which mandates that payment service providers (PSPs) accept EU Digital Identity Wallets for Strong Customer Authentication (SCA) when end-users choose to use them. The framework is designed to prevent a fragmented landscape across the EEA, where more than 3,000 PSPs and at least 27 national wallet providers are expected to operate.

The EPC plans to deliver a comprehensive business and contractual framework, alongside functional and operational rules. Technical specifications will build upon the European Commission’s Architectural Reference Framework (ARF) and technical specification TS12, while also incorporating findings from Large-Scale Pilots (LSPs). The rollout is phased: SCARLET version 1.0 will focus on acceptance under current PSD2 and European Banking Authority (EBA) standards. The EPC intends to publish this first rulebook in December 2027 following a public consultation in the summer of 2027. A subsequent version, 1.1, will extend the framework to the forthcoming Payment Services Regulation (PSR) to ensure compliance by 2028 or 2029. The development is being led by an EPC Taskforce in collaboration with the European Commission and the EBA.

"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."

Giorgio Andreoli, Director General of the European Payments Council.

The companies involved

The European Payments Council (EPC) is the primary body representing payment service providers in Europe, playing a central role in the governance and development of the Single Euro Payments Area (SEPA) schemes. Based in Brussels, the EPC is an international not-for-profit association that works closely with the European Commission and the European Central Bank to foster a harmonised payments market. Its membership includes a broad spectrum of credit institutions and payment institutions, ranging from global banking giants to specialised fintech firms.

The EPC’s influence extends across the 36 countries of the SEPA zone, where it maintains the technical and business rules for credit transfers, direct debits, and instant payments. By managing these rulebooks, the EPC ensures that electronic payments across Europe are as easy and efficient as domestic transactions. The organisation’s move into digital identity standardisation through SCARLET marks a significant expansion of its remit, bridging the gap between traditional payment rails and the emerging European digital identity infrastructure, ensuring that the next generation of authentication methods remains interoperable across borders.

What FF News has reported before

FF News has closely monitored the EPC’s expanding influence and the broader shift toward harmonised European payments. Recently, we covered how PayPal Joins European Payments Council to Shape the Future of SEPA and Instant Payments, highlighting the growing involvement of major tech players in EPC governance. In the infrastructure space, we reported that Currenxie Secures Direct SEPA Participant Status to Accelerate European Payments, reflecting the trend of fintechs seeking direct integration with EPC-managed schemes. Additionally, our coverage of regional leadership shifts, such as when Modulr Bolsters European Leadership with Key Appointments to Drive Regional Expansion, underscores the strategic importance of the European market for digital-first payment providers. We also noted technological shifts in fraud prevention, such as when NOBA Bank Taps Tieto Banktech to Combat Fraud with Verification of Payee Rollout.

What this means

The launch of SCARLET signals that the "identity-as-a-payment-trigger" era is moving from policy theory to technical reality. By creating a unified liability framework, the EPC is addressing the biggest hurdle for payment service providers: who is responsible when a digital wallet authentication fails or is compromised? This move puts significant pressure on legacy banks to upgrade their authentication stacks to support external wallet providers, rather than relying solely on proprietary banking apps. The success of this initiative will depend on whether the EPC can prevent the very fragmentation it fears, as national wallet implementations often diverge despite EU-level mandates. It raises a critical question for the sector: will the EUDI Wallet eventually replace the banking app as the primary interface for payment authorisation?