Bnp, Db, Ing, Unicredit and more. All Epi projects against Paypal, Visa and Mastercard
Here are the next steps of the European Payment Initiative (Epi), unveiled by the Financial Times, on digital payments and credit cards
Within two years, European credit cards could be flanked by a new logo alongside that of Visa or MasterCard.
Last year, sixteen of Europe's largest banks and credit card processors joined the European Payment Initiative (Epi) to create a payments giant capable of coping with the US-dominated "oligopoly".
Card payments in Europe are in fact mainly processed by companies based in the United States. Four out of five transactions in Europe are handled by Mastercard and Visa, according to EuroCommerce, a lobbying group of European retailers.
Epi's goal is to deploy, starting from 2022, a payment network in competition with those of the American Visa and MasterCard.
But as the FT points out, the Brussels-based initiative, which currently employs 40 payment experts, has until September to come up with a blueprint for a pan-European payment service that can be used to pay online and in stores, to settle bills between individual consumers and to withdraw cash at ATMs.
The project enjoys the support of the European Commission and the ECB. It is in fact a question of economic sovereignty but this great technological project should cost several billion euros.
After the summer, supporters of the consortium will then decide whether to take the idea forward, which would require significant additional funding. "As a level of investment, several billion euros will be needed," Joachim Schmalzl, president of the European Payment Initiative (Epi) told the Financial Times , adding: "We can collect the necessary resources together if we collaborate in Europe."
All the details.
WHAT IS EPI
The European Payments Initiative (Epi) was launched last July and became an interim company in December with 22 banks as shareholders.
The initiative aims to build and implement a new payment acceptance circuit to allow individuals to pay for their purchases without going through the acceptance networks of the two American giants Visa and MasterCard.
This new device should make it possible to process card payments, but also wire transfers, direct debits and mobile payments.
CHALLENGE THE DUOPOLY OF VISA AND MASTERCARD BUT ALSO PAYPAL
“The idea is to build a European payment champion capable of tackling PayPal, Mastercard, Visa, Google and Apple,” said Joachim Schmalzl, president of Epi.
These brands refer to the acceptance networks built by the two American giants. It is precisely these infrastructures that allow you to connect a customer's bank with that of a merchant, allowing them to accept credit card payments.
THE BANKS BEHIND EPI
Banks behind the Epi initiative include Deutsche Bank, BNP Paribas, ING, UniCredit and Santander. They currently process more than half of all payments in Europe.
(Here is Start's insight into why Intesa Sanpaolo dropped out of the Epi project last year.)
THE FUNDING RECEIVED SO FAR
So far Epi has received more than 30 million Euros by its promoters, according to a statement from the Ft Schmalzl.
THE ROUTE
The first applications – a system for real-time electronic payments between consumers – could be launched in early 2022, while a broader payment tool could arrive in the second half of next year, Schmalzl told the Ft .
"A pan-European payments network can be established by 2025," said Martina Weimert, Epi's chief executive, in late February.
He warned the British financial newspaper Schmalzl that such dominant market share from Visa and Mastercard could harm consumers and merchants, indicating relatively high rates. "We want to offer an alternative to this oligopoly and offer traders and consumers in Europe a real choice," said the president of Epi.
PREVIOUS ATTEMPTS … FAILED
But the goal of the European Payments Initiative is neither new nor simple to achieve.
Previous pan-European attempts to challenge US supremacy in electronic payments have in fact failed. The “Monnet Project”, which in 2011 was supported by 24 European credit institutions, was not successful. It encountered too many obstacles because it lacked political support and failed to develop a viable business model, the Ft recalled.
THE PLAUSE OF THE EUROPEAN COMMISSION
But this time Brussels is on board.
The European Commission has defined the EPI initiative "a new, ambitious and European project". As reported by the Financial Times, the EU executive “believes that EU citizens and businesses should benefit from a quick, efficient and reliable payment solution. It would be a fundamental and decisive step in that direction, particularly if it covered a broad spectrum of European banking communities ”.
THE SUPPORT OF THE ECB
The project also enjoys the support of the Central Bank of Europe, which has always been in favor of the project. The ECB “is ready to provide technical assistance to the project which must remain private and open to other operators in compliance with the Union's antitrust regulations. In the meantime, Frankfurt will continue to monitor the impact of the evolution of payment systems on the transmission of central bank monetary policies, ” said Benoit Coeurè, member of the ECB board, in December 2019.
THE CRITICALITIES OF EPI
However, in addition to the necessary investments, there are still obstacles to overcome.
The barriers to entry for this industry are high because payment systems are only attractive to merchants if many customers use them and vice versa. "Exceeding the chicken-and-egg problem is the main obstacle," he told the Ft Marcus Mosen, advisor to the payments and former CEO of the German company Concardis payments.
In Europe, “no one can compete alone with the US credit card giants. It will only be possible if we collaborate ”, said the president of the EPI.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/pagamenti-digitali-a-che-punto-e-epi/ on Tue, 04 May 2021 13:06:16 +0000.