Daily Management Review

A ‘Truly European’ Payments System To Rival Visa And Mastercard Being Developed By EU Banks


A “truly European” payments system is expected to be up and running in 2022, said about 16 banks from across the European Union. The aim is to forward the process of digitization in a region where almost half of the transactions in retail purchases are done through cash.
Creation of a home grown rival for the United States payment giants of Mastercard and Visa, as well as tech giants like Alipay and Google has been the aim for European Union policymakers and central bankers for quite some time.
The decision of the banks to launch the unified European payment system was welcomed the European Central Bank (ECB). In order to effectively compete with non-EU payments giants, the creation of an industry-driven solution has been advocated by the ECB has consistently for quite some time now.
The a risk that the payments market would not be fit to support the EU single market and euro was created by the dependence on non-European firms for about two-thirds of non-cash payments in the region, the central bank said last year.
It was “aimed at strengthening Europe, at making it more independent and robust”, said Thierry Laborde, deputy chief operating officer at French bank BNP Paribas, which is also a participant in the payments project. “We will do it collectively, by pooling our resources. As for distribution systems, prices will differ from one bank to another, but the infrastructure will be pan-European,” he said.
The 16 participating banks said in a statement that creating a new standard means of payment is the aim of the so-called European Payments Initiative (EPI) which will offer a card for consumers and retailers all throughout Europe. A wide variety of transactions will be covered by the proposed card ranging from in-store, online, cash withdrawal and ‘peer-to-peer’ transactions in addition to offering solutions to the existing international payment schemes.
BNP Paribas, Commerzbank, Deutsche Bank, Santander, ING, UniCredit and Societe Generale are the lenders that that have already signed up to the project.
The lenders said that an interim company in Brussels will be set up by the project in coming weeks while eh group has also invited other payment service providers to join.  “EPI’s objective is to offer a digital payment solution that can be used anywhere in Europe and to supersede the fragmented landscape that currently still exists,” the banks said.
The novel coronavirus pandemic related crisis - which has witnessed the use of cash in retail transactions plummeting in favor of contactless payments — “has underlined the need for a unified European digital payment solution”, the lenders said in the statement.