Europe’s largest bank and more than 30 credit card processors are trying to create a payment giant capable of dismantling “oligopoly” in the United States.
The Brussels-based initiative, which currently employs 40 payment specialists, has until September to draw a blueprint for the Pan-European Payment Service that can be used to make online payments as well as in stores, to settle bills between individual customers and withdraw cash at ATMs.
“The idea is to build a European payment champion that can accept PayPal, MasterCard, Visa, Google and Apple,” said Joachim Schmalzel, chairman of the European Payments Initiative.
The banks and acquirers behind the initiative include Deutsche Bank, BNP Transport, ING, Unicred and Santander, and are currently processing more than half of all European money. The project has the support of the European Commission as well as eurozone financial regulators.
EPI has so far received more than € 30 million from its supporters, Shamjal said. He is a board member of the German Savings Banks Association, the country’s largest retail banking group and a staunch supporter of the initiative, which is still looking for a brand name.
The first real-world applications – electronic real-time payment systems for customers – could be launched in early 2022, and the broader payment tool could follow in the second half of next year, Shmaljal said.
Bouchard Balz, a member of the Bundesbank board, said Germany’s central bank supported the EPI, which would “strengthen the EU’s strategic autonomy in the money market, increase competition and improve customer choice.” The ECBO welcomed the initiative.
Card issuance in Europe is primarily processed by US-based companies. Four of the five transactions in Europe are handled by MasterCard and Visa, according to Eurocommers, a lobby group of European retailers.
Shamjal warned that such an influential market share could hurt consumers and merchants – pointing to questions about data security as well as relatively high fees. “We want to offer an alternative to this science and give Europe’s traders and consumers a true choice,” he said.
Attempts to challenge U.S. dominance over previous pan-European payments have failed. The “Monet Project”, which had the support of 24 European donors in 2011, failed because it lacked political support and failed to develop an effective business model.
Access barriers are high because payment schemes are only attractive to merchants if many customers use them – and vice versa. “The key is overcoming the chicken and egg problem,” said Marcus Mossen, a payment consultant and former chief executive officer of the German payment firm Concardis. ”
A Deutsche Bank spokesman said the European funding scheme was needed “to stay independent” and that Germany’s largest donor had joined the initiative “to support this joint effort by European financial institutions”.
Several countries have payment solutions that are successful in certain areas, for example, Germany’s “Girocard” and France’s “Carte Bancair” offer cheap access to cash and in-store payments, and the Netherlands has an “ideal” ecommerce payment system.
“National solutions cannot be shortened across European borders,” Schmidt says. He said the idea behind EPIs was to coordinate the best national initiatives and then bring them across Europe.
“No one [in Europe] On its own it can compete with US credit card giants. It will be possible if we team up. ”
The Brussels-based EPI team started nine months ago. After the summer, the consortium’s supporters will decide that they will move forward with the idea, which will require significant additional funding. “A few billion euros will be needed as a level of investment,” Shamjal said. “If we team up in Europe, we can collect the necessary resources jointly.”