European Payments Initiative Benefits and Concerns

The European Payments Initiative (EPI) is a game-changer for European consumers and businesses. It's a joint venture between 31 European banks to create a single, pan-European payment system.

The EPI aims to reduce transaction costs and increase the efficiency of cross-border payments. This is a major concern for businesses that operate across multiple countries.

One of the key benefits of the EPI is that it will allow consumers to make payments in euros across different countries without incurring high fees. This is a significant improvement over the current system, where fees can be as high as 1% of the transaction value.

The EPI will also enable instant payments, which will make it easier for consumers to make and receive payments. This is a major advantage for businesses that rely on quick and secure transactions.

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Epi stands for European Payments Initiative, a proposed pan-European payment system that aims to create a single, unified payment solution for the European Union.

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The Epi is designed to be a fast, secure, and convenient way to make payments across Europe, using a single card or mobile device.

It's expected to replace or complement existing payment methods like credit cards, debit cards, and mobile wallets.

The Epi will be based on a new, open-standard technology that allows for seamless transactions across borders.

This will eliminate the need for multiple cards or accounts, making it easier for consumers to shop and travel across Europe.

The Epi is expected to be launched in 2024, with a pilot program already underway to test its feasibility.

This initiative is backed by some of Europe's largest banks and financial institutions, including BBVA, BNP Paribas, and Santander.

The EPI timelines are an essential part of understanding the initiative's goals and progress.

The aim is to test a 'proof of concept' in 2021 before launching in the first half of 2022.

This three-to-four-year migration phase will see a gradual transition to EPI products and services, but the specifics of the first phase are still unclear.

Founding members view the programme as a long-term investment that will deliver benefits over time, rather than significant revenue streams in the first year.

Martine Weimart, acting CEO of EPI, emphasized that this is not a short-term play, but a longer-term strategy for payments in Europe.

Here's a brief overview of the key timelines:

EPI is seeking to create a pan-European payment solution, building on the existing standardization of interbank payments in Europe. This standardization is already well established through SEPA and the pan-European instant payments system, SCTInst.

EPI's long-term aim is ambitious, striving to become a new standard means of payment for all transaction types. This includes in-store, online, cash withdrawal, and P2P transactions, in addition to existing international payment scheme solutions.

The EPI is initially focused on existing payment types, such as cards and wallets, with few ambitions for major, innovative improvements.

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The European Payments Initiative is a complex project, and there are many questions and concerns surrounding it.

One of the main concerns is the potential impact on existing payment systems and the potential disruption to the market.

Will the EPI replace existing payment cards, such as Visa and Mastercard, or will it coexist with them? The EPI aims to create a pan-European payment card, but it's unclear how this will affect the existing market.

The EPI's goal is to create a more efficient and secure payment system, but it's also raising concerns about data protection and cybersecurity.

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EPI could be worth it because it makes sense from a geopolitical standpoint, breaking the US hegemony in payments infrastructure and technology that currently dictates who Europe can do business with.

Currently, European consumers rely on US-owned cross-border retail payments infrastructures, which can be a problem for regulators.

The European payments market is still hugely fragmented, with different payment solutions available in different countries, making it difficult for customers to pay across borders.

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You can pay with Vipps in Norway, but only if you have a Norwegian bank account, and you can pay with Lydia in France, but only in France.

Investing in local solutions on a yearly basis for maintenance, security patches, and other necessary updates is inefficient and makes large-scale innovation difficult.

Europe is still a very cash-heavy economy, and EPI could help convert a large portion of these cash transactions to realize a good degree of scale.

EPI's long-term aim is to become a new standard means of payment for all transaction types. This includes in-store, online, cash withdrawal and P2P, in addition to existing international payment scheme solutions.

The EPI is initially focused largely on existing payment types, such as cards and wallets. It has few ambitions with regard to major, innovative improvements for European consumers and merchants.

The EPI is assessing potential ways of creating a pan-European payment solution. This builds on the traditional interbank payments space, where Europe is well standardised via SEPA and the pan-European instant payments system, SCTInst.

The interim company is drawing up the initial ecosystem with the aim of registering the target company in the last quarter of 2021.

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EPI could potentially provide a bedrock for future European payments innovation, but it may not be ambitious enough.

Payments are a business process that should support organisations in innovative, value-adding ways. Europe is at the forefront of Open Banking, with PSD2 enabling exciting new services that touch a wide array of products in consumers' financial portfolios.

By utilising newly built instant payments rails, both banks and fintechs can offer consumers a superhighway of financial products tailored to their unique life experiences. This is what true innovation looks like.

A comprehensive industry engagement plan, including merchants, consumer groups, and the supply-side of the market, would help create a truly forward-looking platform for European payments, fit for the next 50+ years.

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Epi aims to become a new standard means of payment for all transaction types, including in-store, online, cash withdrawal, and P2P.

Existing international payment scheme solutions are already available, but Epi wants to take standardization a step further towards the consumer.

The Epi ecosystem is being drawn up by an interim company, with the goal of registering the target company in the last quarter of 2021.

Epi is initially focused on existing payment types, such as cards and wallets, with few ambitions for major, innovative improvements.

The traditional interbank payments space in Europe is already well-standardized via SEPA and the pan-European instant payments system, SCTInst.

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European banks are at the forefront of the European Payments Initiative (EPI), with 16 major banks, including BNP Paribas, paving the way for the future launch of EPI.

These banks are the founding members of EPI and are driving the initiative to create a unified pan-European payment solution.

The ambition of EPI is to create a digital payment solution that can be used anywhere in Europe, superseding the fragmented landscape that currently exists.

EPI aims to offer a seamless, competitive, and unified payment solution for the whole of Europe that is also available to all European consumers.

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The creation of EPI will support the implementation of the political agenda for both European public institutions and national authorities, particularly through the creation of a truly European solution in the fields of payments, banking, and technology.

The EPI solution will also bring tangible benefits to European merchants by offering them a unified payment solution for the whole of Europe.

More than 50% of retail payment transactions in Europe are still done by cash today, and EPI aims to convert a large portion of these cash transactions to EPI to realize a good degree of scale.

The European Commission's EV-P Valdis Dombrovskis has urged banks from other countries, as well as European fintechs and other European payment service providers, to join the first 16 members, and several banks have already signed up.

Additional Spanish, Polish, and Finnish banks have joined the Interim EPI Company as shareholders, with the Polish banks being the first to join from outside the Eurozone.

EquensWorldline and Nets, both European payments processors, have also joined the Interim EPI Company as shareholders.

The creation of EPI will contribute to strengthening the Single Market and the European digital agenda.

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