The latest edition of the Europe Global Payments Summit, hosted online by Currency Research on 30 March, featured a high-profile panel on retail payments in Europe, bringing together a public and a private sector initiative ”with aligning views” on how to create a pan-European retail payments scheme. In line with the European Commission’s Retail Payments Strategy (RPS), the European Payments Initiative (EPI), backed by 31 private banks, wants to harmonise fragmented national retail payments markets to create a European sovereign solution that would challenge the dominance of non-European retail payments infrastructures, mainly the US-based players and the BigTechs that are currently “knocking on the door” of European payments.
The payments sector is evolving at a very high speed, explained Eric Ducoulombier, Head of Retail and Payments Unit, DG FISMA, European Commission, and the more widespread that digital payments become, the more critical—and vulnerable—they become for the interrelations with the economy. In that respect, strategic autonomy is a core element of the RPS. “Whoever controls payments has a good chance of controlling the economy,” said Ducoulombier.
Biggest Challenge: Continued National Fragmentation & BigTech
Martina Weimert, the CEO of EPI Interim Company, elaborated that European integration is one of the two key tasks for EPI, as some national payment scheme solutions currently exist in Europe, but not in every jurisdiction.
“We have sadly observed the absence of European champions in the domain of payments, at least, as regards the front end or the end user side of the ecosystem,” agreed Ducoulombier. Hence, EPI is the most significant initiative aligning with the Commission’s RPS, he said.
Foremost among considerations, harmonisation is key, according to Weimert. “Everybody is basically reinventing the wheel nationally,” she remarked. “It is absolutely crucial to harmonise and to standardise as much as possible. That is what the merchants require. They don't want to have national integrations; they would love to have one overall integration for Europe.” EPI plans to “bring a lot to European independence and sovereignty,” Weimert stressed.
Innovation is another main focus for EPI, Weimert pointed out. Competition has become very intense in Europe, as elsewhere in the world, with many new features and solutions emerging every year. “So only by joining forces, we can make really a difference [and] we have a massive innovation budget, which we consider as necessary to stay competitive in Europe.”
Instant Payments & Doing Cost Harmonisation the European Way
Concretely, Weimert said, the EPI will be a one scheme brand with two major product offerings: a physical/ virtual card and a digital wallet, which would be also integrated into the card. The offerings will be combined with EPI’s own front-end connectivity API solution and will “most interestingly” be run on the European infrastructure SEPA Instant Credit Transfer (SCT Inst) at the back-end for the clearing and settlement side. These two products will be offered to consumers either through the participating banks’ own mobile banking apps or through an independent standalone app for participating banks that may not want to integrate it into their own app, but still want to provide it to their customers.
EPI will decide at the end of this year if they are ready for a “real market launch” in 2021, starting with P2P and P2Pro in Q1 and then moving into POS and e- and m-commerce in Q2. Concurrently, a full rollout of SCT Inst is hoped to be established by the end of 2021. Bringing real-time payments to the market is also a focus of EPI, said Weimert. “We would like to leverage instant payments, because it's clearly a strong innovation for the market [and] massive introduction of instant payment in retail is so far not existing.”
The Commission, Ducoulombier said, also wants instant payments to be the new normal. However, he underlined that the move to more digital and more instant can translate to more risk. Along with Ducoulombier, Weimert agreed that strong data protection is of key importance to the European market and underpins EPI’s “doing it the European way” philosophy. She added that EPI is aware of the European regulatory environment and therefore also keen on involving the merchant and consumer associations, as they have their own requirements and perspectives on what the European market needs.
Payments Choice & International Aspirations
Ensuring the public is offered the broadest possible range of payments solutions is on top of EC’s agenda and similarly informs the EPI’s objective to become a mainstream payments option. “The European consumers deserve to have a real choice,” said Weimert. “It would have been much easier to just go for an instant payment and digital end-to-end solution on mobile phones. But people love their cards. If you don't offer cards, then maybe you will be a very attractive niche solution, but you will be niche for a very long time.”
In line with RPS’s vision of SEPA schemes for international payments and improvement of remittances, EPI has already received requests from other players in the US, Canada, Australia, India, and China. “We are very positive about the potential of this solution, internationally speaking,” she said.
Check the website for more virtual programming from the Global Payment Summits in the near future and mark your calendar for Currency Research’s hybrid Central Bank Payments Conference, taking place in Athens, Greece on 8–10 November.