It's a hit or miss for EPI
Connective Payments team, December 2021
How will the penny drop for EPI, the European Payments Initiative? A year ago, an interim company was registered in Brussels that would pave the way for EPI. This resulted in a detailed technical and operational roadmap. Led by CEO Martina Weimert and Chairman of the Board Joachim Schmalzl, and in collaboration with the initiators (31 banks and 2 processors), the path was paved for the construction of a European card scheme, competing with Mastercard and Visa. We previously wrote an article about our vision of EPI and an interview with co-initiator Eric Tak of ING.
Decisions are expected “over the next few weeks”, said Mrs Weimert. According to information from the Börsen-Zeitung, a meeting is planned for shortly before Christmas, at which the capital commitments will then be tied down. From the ranks of the German banking industry, a commitment from the cooperative sector was still pending. Italian and Spanish banks are still hesitating. In the context of EPI, however, it is said that the political pressure to participate is great.
So the big question is: will EPI start rolling out its instant and card payments network or will the initiators shy away from the sky-high costs and risks?
To make this difficult decision, the participating banks sought support from the governments of the 7 countries where they are located. For example, ING has asked the Dutch government for a financial contribution for the conversion of the Dutch payment terminals, which is necessary to accept the EPI cards. At the initiative of France, the 7 countries issued a joint statement on November 8. In this statement, they express their support for the EPI initiative. This statement returns the same arguments that were previously used by the European Commission in 2018. At that time the EC was putting pressure on French banks to replace Carte Bancaire with a pan-European system.
The 7 countries are looking forward to the launch of the EPI project, because it has the following ambition:
- One scheme for the European payments market, instead of the current fragmented payment landscape.
- No dependence on solutions offered by non-European actors, both in point of sale and online.
- No unnecessary barriers to move the internal market forward.
- Greater competition and innovation, with potential consumer benefits.
- No distinction between national and cross-border payments.
- Reduction of risks and vulnerabilities in retail payment systems.
- Control of sensitive payment data to better protect European citizens.
“Public funding would be nice. Let’s not hide it – it’s going to be a massive investment. It’s expensive. (…) It is a major shift so it will take time. Anybody who tells you it’s an easy call and let’s do it quick and dirty, well it’s not really looking to transform the European ecosystem.”
Martina Weimert, CEO of EPI
The initiators would of course also have liked to receive financial support from the authorities to support their business case for EPI. Unfortunately for them, this does not apply. At the request of the Netherlands, the statement has been drafted in such a way that political support is given to the initiative, but that it is also clear that EPI is a private initiative in an open and fair internal market for payments. Other private initiatives should be treated equally. The banks will therefore have to be self-sufficient, making the actual implementation of EPI difficult and, to be honest, less likely.
Update March 2022
On 11 March 2022, a short message was published on the website of the EPI Interim Company. It states that thirteen shareholders 1 confirmed on February 25th “that they remain convinced of the strategic value of a unified payment solution ready for commerce leveraging especially instant payments and want to go ahead. Therefore, the EPI Interim Company is now adapting its scope and objectives to this new dimension”. This means that 20 banks have pulled out, including all Spanish members as well as Germany’s Commerzbank and DZ Bank. French lenders now dominate the group.
1 Banco Santander, Banque Fédérative du Crédit Mutuel, BNP Paribas, Crédit Agricole, Deutsche Bank, Deutscher Sparkassen- und Giroverband, Groupe BPCE, ING Bank, KBC Bank, La Banque Postale, Nets, Société Générale and Worldline.