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Eurozone banks break ground on the European Payments Initiative

A group of 16 European banks from five countries (Belgium, France, Germany, the Netherlands and Spain) have paved the way for the future launch of the European Payments Initiative (EPI). 

The ambition of EPI is to create a unified pan-European payment solution leveraging instant payments and the single euro payments area (SEPA) Instant Credit Transfer (SCT Inst), offering a card for merchants and consumers across Europe, a digital wallet and P2P payments. The solution aims to become a new standard means of payment for European consumers and merchants in all types of transactions including in-store, online, cash withdrawal and “peer-to-peer” in addition to existing international payment scheme solutions. 

Concrete benefits 

EPI’s objective is to offer a digital payment solution that can be used anywhere in Europe and to supersede the fragmented landscape that currently still exists. In doing so, EPI founders are responding to merchant and consumer communities that have been calling for payment initiatives to take a more pan-European approach. 

EPI is first and foremost designed to benefit European citizens, possibly boosting innovation in the world of payments. More than 50% of retail payment transactions in Europe are still done by cash today. The EPI solution will also bring tangible benefits to European merchants, by offering them a seamless, competitive and unified payment solution for the whole of Europe that is also available to all European consumers. 

Strengthening the Single Market and the European digital agenda 

In addition, the creation of EPI will support the implementation of the political agenda for both European public institutions and national authorities, in particular through the creation of a truly European solution in the fields of payments, banking and technology. Existing digital payment solutions are fragmented in Europe and European citizens are still unable to pay digitally everywhere. Moreover, the COVID-19 crisis has underlined the need for a unified European digital payment solution. In this sense, EPI also aims to align the European payments ecosystem of banks, merchants and acquirers / payment services providers, thereby contributing to strengthening of the Single Market and the European digital agenda. 

The beginning of the implementation phase is expected to materialise in the coming weeks through the creation of an interim company in Brussels, Belgium, which will set out clear deliverables including the completion of the technical and operational roadmap and initiating the implementation work to achieve a best-in-class user experience. The accomplishments of this Interim Company will be evaluated by each bank before moving on to the EPI’s final corporate structure. 

Other payment service providers are invited to join the initiative. Until the end of 2020, a window remains open for European market players, individual banks or banking syndicates, as well as third-party payment service providers to apply and join EPI as a founder. EPI is expected to enter the operational stage in 2022. 

EPI members 

The EPI founding members to date are: 

  • BBVA.
  • BNP Paribas.
  • Groupe BPCE.
  • CaixaBank.
  • Commerzbank.
  • Crédit Agricole.
  • Crédit Mutuel.
  • Deutsche Bank.
  • Deutscher Sparkassen- und Giroverband. 
  • DZ Bank.
  • ING.
  • KBC Group.
  • La Banque Postale. 
  • Banco Santander.
  • Societe Generale.
  • UniCredit.

Positive noises from the ECB

The European Central Bank (ECB) has welcomed the launch the EPI. The bank notes that, in recent years, significant progress has been made towards a safe, efficient and integrated European payments market with the introduction of pan-European infrastructures under SEPA. Nevertheless, fragmentation persists in the way people actually pay, be it online or on-site in brick and mortar shops.

Ten European countries still have national card schemes that do not accept cards from other EU Member States. There is also a growing number of innovative services, such as mobile wallets, that are only offered at the national level. The current situation has attracted initiatives from global players that aim to overcome the shortcomings of cross-border retail payments by building a new separate payments ecosystem. In November 2019, the Eurosystem relaunched its retail payments strategy, calling for increased collaboration between European stakeholders to provide payment services that meet the needs of European customers and strengthen the autonomy of the European retail payments market.

The bank says it sees the EPI as a response to this call. It seeks to replace national schemes for card, online and mobile payments with a unified card and digital wallet that can be used across Europe, thereby doing away with the existing fragmentation. As it is based on the SCT Inst scheme, it can immediately capitalise on powerful and sophisticated existing infrastructures, such as the Eurosystem’s TARGET Instant Payment Settlement (TIPS).

“The European Payments Initiative will have to tackle the fragmentation in European retail payments and should encompass all euro area countries, and eventually the entire European Union”, said ECB Executive Board member Fabio Panetta. “The foreseen effective implementation and a growing number of participants have the potential to strengthen the role of European providers.”

The ECB concluded that the Eurosystem will continue to support private initiatives for retail payments provided that they fulfil five key objectives: pan-European reach, customer friendliness, cost efficiency, safety and security, European identity and governance, and, in the long-run, global reach.

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