Not only will Americans be banned from travel to Europe, the big US payment companies may soon face competition by a new credit card system in development by 16 European banks.
The new pan-European payments system is called the European Payments Initiative (EPI) and will offer consumers and merchants a new payment system that includes cards, digital wallets, and P2P payments expected to launch in 2022.
Should Visa, Mastercard, American Express, Alipay, Google Pay, Apple Pay, or other established payment systems be worried about the new kid on the EU block? Not necessarily, though as most merchants know, local payment preferences are quite different from one EU country to the next, not to mention around the world.
One payment system for all EU?
The founding 16 banks come from Germany, France, Belgium, the Netherlands, and Spain and would use the European real-time Instant Payments/SEPA Instant Credit Transfer (SCT Inst) system to provide a new card for in-store, online, P2P, cash withdrawal, and international payments.
It’s also important to note, there’s not a single British bank in the group of founders.
BBVA stated the group’s goals for the new system on its website:
“EPI will first and foremost benefit European citizens, possibly boosting innovation in the world of payments. More than 50% of retail payment transactions in Europe are still done by cash today. The EPI solution will also bring tangible benefits to European merchants, by offering them a seamless, competitive, and unified payment solution for the whole of Europe that is also available to all European consumers.”
Better for EU consumers & business?
Many EU banks have pushed for a broad European payments scheme to provide a single, more stable, and secure payments system across Europe to simplify the financial lives of EU consumers.
Last year the European Central Bank estimated that non-European payment providers handled two-thirds of non-cash European payments.
As merchants know, navigating the preferred payment and regulatory structure from one EU country to the next is expensive, often confusing, and not always helpful to businesses in Europe or abroad.
“The initiative will reinforce competition in the payment services market, currently dominated by a few big international operators/schemes,” Carmen Alvarez Diez, a spokesperson for BBVA, in Spain, said via email to Mobile Payments Today. “The COVID-19 crisis has confirmed the need for digital payment solutions in Europe. Therefore, EPI’s wallet solution offering cards and digital SCT Inst would be ideally positioned offering hence the choice to clients.”
BBVA said EPI also aims to align the European payments ecosystem of banks, merchants, and acquirers/payment services providers and contribute to a stronger single EU market and European digital system.
The new bank organization will be headquartered in Brussels initially and initiated by 16 banks including BBVA, BNP Paribas, Groupe BPCE, Caixabank, Commerzbank, Credit Agricole, Credit Mutuel, Deutsche Bank, Deutscher Sparkassen und Giroverband, DZ Bank, ING, KBC, La Banque Postale, Santander, Societe Generale, and UniCredit. Additional banks and third-party payment processors would have a chance to join as founding members before the end of 2020.
Picking a name for the new EU payments system could prove the biggest challenge for the founders as many EU projects often go. The Germans will insist their name is the best. The French will claim it must reflect their heritage while the Italians will demand a creative and fashionable name and who knows what the Spanish will suggest?
Regardless, by 2022, EU merchants will be asking, will that be Visa, Mastercard, or Eppy?
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