Epi, because the EU ATM to challenge Visa and Mastercard will flop
Some European banks are stalling with the European Payments Initiative (Epi), a new payment project that is expected to compete with Mastercard and Visa. Here are the details
The European Payments Initiative (Epi), the payment network project in competition with those of the American Visa and MasterCard, does not take off.
Epi's goal is to deploy a pan-European payments network starting in 2022. But the roadmap risks not being respected.
In July 2020, 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".
But two years later Commerzbank and DZ Bank are planning to pull out of the project due to concerns over a relatively high cost of equity ownership for German institutions.
Last November the EPI launched an appeal for public resources necessary for the project. In fact, private lenders are not willing to raise all the necessary money.
"Even UniCredit, the only Italian group to be among the founding partners of Epi, seems likely to break away from the initiative given that its membership concerned the German subsidiary Hvb which had participated in system solidarity in Germany", reports Il Sole 24 Ore .
"The final decision is expected in the coming days when the Epi Interim Company, as announced in the last communication of 23 December, will unveil the final list of members and the detailed plans of the project that had been scheduled" between the end of January and the beginning of February »”, underlines the Confindustria newspaper.
All the details.
WHAT IS EUROPEAN PAYMENT INITIATIVE
The European Payments Initiative (Epi), launched in July 2020, became an interim company in December 2020 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. 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 AIM OF EPI IS TO CHALLENGE THE VISA AND MASTERCARD DUOPOLY
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.
The new device should make it possible to process card payments, but also wire transfers, direct debits and mobile payments.
THE BANKS BEHIND EPI
Banks behind the initiative include Deutsche Bank, BNP Paribas, ING, UniCredit and Santander. They currently process more than half of all payments in Europe.
THE FUNDING RECEIVED SO FAR
Epi has so far received more than € 30 million from its promoters, the president of the European Payment Initiative told the FT last May.
THE APPEAL FOR PUBLIC INVESTMENTS
Last November, the EPI launched an appeal for public money , as private lenders are unwilling to raise all the money they need.
Epi is looking to engage more banks and other payment operators by December to begin rolling out its instant and card payment network. "Public funding would be nice," Epi CEO Martina Weimert told a event organized by the European Federation of Payment Institutions. “Let's not hide it: it will be a huge investment. It is expensive".
A Shattered Project?
But today the EPI "is definitively crumbling – according to Il Sole 24 Ore – after the recent defections from the big Spanish banks starting from BBVA and Santander (whose president Ana Botin is also at the helm of the European Federation of banks) and for the unofficial ones but now given for certain by the German Commerzbank and Dz Bank ".
Even the German operations of Unicredit would no longer have plans to participate.
ITALIAN CREDIT INSTITUTES OUTSIDE THE PROJECT
“No other Italian bank had joined and now the absence of important countries and markets such as Germany, Spain and Italy makes it unlikely that the Epi project will take off. At least as it was initially conceived, moreover with the blessing of the ECB, or through the initiative of a privately held company controlled and financed by the big banks of the Eurozone ”, underlines the Confindustria newspaper. (Here the in-depth analysis by Start on why Intesa Sanpaolo withdrew from the Epi project in 2020.)
GOOD NEWS FOR THE DIGITAL EURO?
Finally, for a project that could sink another is ready to emerge.
“If the end of the Epi project were to be confirmed, it could be good news for the digital euro – comments Andrea Filtri, head of research at Mediobanca Securities – which could become the direct instrument for payments. But this implies that the choice of the type of digital euro covers the widest possible spectrum of applications and services ”reports Il Sole 24 Ore.
The digital euro is a Cdbc or a digital currency issued by the ECB . Electronic money "will be ready in 2023". This was announced by the president of the ECB itself, Christine Lagarde in mid-January .
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/epi-perche-il-bancomat-ue-per-sfidare-visa-e-mastercard-fara-flop/ on Thu, 03 Feb 2022 14:18:23 +0000.