A strong and independent “Euro-Pay”
Within Europe, two American giants (VISA and Mastercard) currently represent 3.5 trillion dollars’ worth of payment volume all on their own. As international payment solutions continue to gain popularity, especially American and Chinese mobile offerings like Apple Pay, Samsung Pay, Alipay, WeChat Pay, Union Pay and others, that number is also growing.
As commercial tensions are currently high and the recent health crisis showed how important it is for strategic economic sectors to reduce their dependence on foreign parties, it has become imperative to define a European payment structure. One that can assure greater independence vis-à-vis extra-European laws and jurisdictions to protect European markets, consumers and merchants.
After all, the use of solutions entirely controlled by foreign companies also means adhering to their choices for data protection, payment security and the use of biometrics.
A 100% European payment system
European banks are mobilizing to offer European consumers and businesses a new payment standard. This 100% European system, intended for 2022, will cover all types of transactions everywhere in Europe: in-store payments, on-line payments, cash withdrawals and person-to-person transfers within France or anywhere in Europe.
A global, innovative solution to compete with big tech players, especially GAFA, by enticing European consumers who are starting to use their smartphones and applications for person-to-person transfers more than their cards. In this respect, EPI also has the goal of making Europe into an innovative actor in the world of payments.
Although the project remains a private initiative, the Central European Bank has given its support, applauding the attempt to reduce market fragmentation for European payments and to restore independence for payments.
A launch scheduled for 2022
EPI represents a true challenge since it will require the migration of important technologies, changing the bankcard of more than 400 million consumers and bringing together numerous stakeholders. To date, nearly a dozen European countries have their own national system (including France, Germany, Italy, the Netherlands, Spain, and others.) These countries will need to leave behind certain existing electronic payments infrastructures, while preserving other elements. Banks involved in the initiative are in the process of converting to a common technical baseline. The total cost of these operations will be several billion Euros, and its objective is to clear the way for the sovereignty of European payments.
Questions for Thierry Laborde, Deputy Chief Operating Officer of BNP Paribas
We often hear that EPI will allow Europe to preserve its sovereignty. Do you think that is important?
I prefer the term “independence”. Sovereignty could imply a withdrawal, which is not a part of our vision. For businesses, EPI will offer very competitive commission rates and allow rapid payments since the solution will use a very powerful, instant European transfer system, one that has already been operational for two years. Individuals will have two options: a European payment card (a physical card or a digital smartphone version one) and a digital solution within an electronic wallet on smartphone to make transfers to other individuals or internet payments. Lastly, the arrival of a third heavyweight, alongside VISA and Mastercard, will stimulate competition and benefit both consumers and businesses.
For businesses, EPI will offer very competitive commission ratES.
Will EPI accelerate the disappearance of cash?
Cash is not dead yet in Europe. It is still in use in Germany and Italy in particular. And, cash still represents 50% of transactions in France. Our objective is to offer the consumer a choice in their payment methods and to guide them as their use of payments evolves. After all, since the start of the health crisis, cash withdrawals at ATMs have fallen and contactless payment has seen a sharp increase.
Cash is not dead yet in Europe.
What will be important for the success of EPI?
In technical terms, a powerful European infrastructure of instant transfers is a strong feature. In terms of the offer, innovation is essential: we want to bring the best of what already exists together in one solution, help people adapt to new usages and innovate.
In terms of the offer, innovation is essential...
Photo credit: WavebreakmediaMicro