Major banks take another step towards ‘truly European’ payment system
Some 16 of Europe’s major banks are set to initiate the implementation of a digital payment solution “that can be used anywhere in Europe”.
The solution, to be created by the European Payments Initiative (EPI), will challenge the dominance held by US card issuer giants Mastercard and Visa in Europe.
The idea is “to supersede the fragmented landscape that currently still exists”
It will also pose another barrier to Big Techs such as Alipay and WeChat trying to break into the region.
In the coming weeks, banks start implementation through the creation of an interim company in Brussels, Belgium. The EPI expects the solution to be in operation by 2022.
What does “truly European” look like?
Member banks of the EPI span five European countries. These include Belgium, France, Germany, the Netherlands and Spain.
The solution they’re building will deliver pan-European cards for consumers and merchants. It will also offer a digital wallet and peer-to-peer (P2P) payments system.
This means in-store, online, cash withdrawal and P2P transactions will all be covered by the initiative.
The banks say they are creating “a new standard means of payment for European consumers and merchants”.
The idea is “to supersede the fragmented landscape that currently still exists”.
How will it help?
The EPI believes that the new payments system will help drive the switch from cash to digital. Currently, it says more than 50% of retail payment transactions in Europe are still done by cash.
Pushing “a truly European solution”, the EPI wants more consumers to pay digitally around Europe, and help more merchants accept digital payments.
In theory, it should also help European merchants. The system would wipe away Visa and Mastercard’s fees, though Europe’s banks will want to make their own profit
The fact that this will likely be one flat percentage fee – rather than varying fees depending on card providers and schemes – will however help merchants.
In a broad sense, the EPI hopes that a pan-European system will strengthen both the Single Market and the continent’s cohesive digital agenda.
Member banks of the EPI include: BBVA, BNP Paribas, Groupe BPCE, CaixaBank, Commerzbank, Crédit Agricole, Crédit Mutuel, Deutsche Bank, Deutcher Sparkassen- und Giroverband, DZ BANK Group, ING, KBC Group, La Banque Postale, Banco Santander, Société Générale, and UniCredit.
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This is long overdue as Europe should have its core payments system under European control.
I’m assuming the system will be €uro orientated, but hopefully they will take account of other minor currencies still prevalent in Europe? And countries not in the EU? The absence of any British bank from the initial membership fills me with deep concern as the architecture needs to work for all major financial zones in Europe, and being in at Day1 of design is vital if you want to affect things.