European Payments Initiative : Towards a Stronger Europe
On October 7, 2020, the EPI Interim Company was finally created to define all the different aspects of the European Payments Initiative, the future European payment network.
The European Payments Initiative
The European Payments Initiative is the future scheme.
In the planning stage since 2018, EPI has officially created the interim company on July 2, 2020. At the initiative of 16 banks from 5 major European countries (France, Germany, Belgium, Spain and Netherlands), open to EU industrials players, and supported by the European Commission, this project aims to create a pan-European interbank and payment network to provide an uniform transaction system for all European Union countries.
In the past, other initiatives have been studied but cancelled, like the Monnet Project which was ended in 2012 due to “the perceived absence of a viable business model” according to the European Central Bank.
The objective is to reach 60% of european monetary exchange volumes within 5 years.
Thus, the EPI Interim Company is defining the roadmap and the operation of the project. Until the end of 2020, the project was open to welcome new players, either countries or private companies active in the european payment industry. Today, the project is launched and it is expected that the EPI will enter the first operational phase in 2022. The objective is to reach 60% of european monetary exchange volumes within 5 years.
But beyond setting up a “Made in Europe” system, what are its objectives and what will it change for consumers and merchants ?
An European System for A Stronger Europe
Today, some European countries have its own payment system with its own payment card such as “Groupement des Cartes Bancaires CB” in France, Girocard in Germany, Bancontact in Belgium, and so on…
The objective of the EPI is to develop the EU sovereignty through a payment scheme, and also by developing the SCT Inst as a new EU payment means.
In addition to standardizing procedures, the European Payments Initiative has an important challenge: establishing European sovereignty by reducing its dependence from global players.
By taking the lead with its own payment system, Europe can also better apply its own security rules such as GDPR (General Data Protection Regulation) and strengthen the protection of personal data.
This same protection will facilitate money transfers and online payments in the member countries of the European Union. Whether with your new 100% European bank card, your digital wallet or any other payment solution implemented by the initiative, people will be able to make payments without having to enter their personal data.
And on the merchant side, the benefits are also present. Today, high fees and their accumulation sometimes makes you dizzy with the expensive costs. The market expectation, through the European Payments Initiative, is to lower the global payment business model with less expensive scheme fees on cards and an attractive SCT Inst cost. On top of that, security will be increased and payments will be guaranteed.
Finally, some will wonder how a project of this magnitude can be implemented so quickly. Indeed, at the time of writing this article, we are in February 2021 and, as previously mentioned, the first operational phase is scheduled for 2022.
This rapidity can be explained by the fact that the EPI aims to be based on both cards and SEPA instant payment system, SCT Inst, and therefore on an already existing infrastructure. Even though, it might be necessary to gradually upgrade the cards already in circulation and update the payment terminals, among others… This is a fairly substantial undertaking, to which must be added the difficult context of the pandemic.
But the EPI remains on track to quickly offer an efficient and secure pan-European payment system.
At Market Pay, we are already capable of offering the SCT / SCT Inst payment and we remain attentive to the evolution of the market. We will be ready to offer solutions that are in line with the European Payments Initiative as soon as it comes into full force.
You can be sure, that when the European Payments Initiative will be in place, at Market Pay, we will advise and accompany merchants towards this new initiative for both cards and SCT Inst payments.
