Landmark pan-European payment system EPI calls on fintechs for build phase

The European Payments Initiative (EPI), founded in July last year by the European Central Bank (ECB) , is finally ready to start building the continent’s first pan-European payment system.

With another 17 members – 15 of which are banks and credit unions, and two of which are third-party payment acquirers – the EPI has announced it’s “ready to start building the payment solution architecture”.

European payment giants Worldline and Nets became shareholders in the EPI last year

This means fintech start-ups, as well as larger payments providers, can submit their applications to be a part of the pan-European payment system.

The intention is for the EPI to leverage “Target Instant Payment Settlement (TIPS)”, which was launched in November 2018. Currently, TIPS only settles payment transfers in euro.

The payment solution will offer a card for consumers and merchants across Europe, a digital wallet and peer-to-peer (P2P) payments.

“To build this comprehensive solution, [the] EPI is now looking for qualified technical partners,” the interim company said in a statement. Fintechs will need to submit their applications here before 1 March 2021.

Challenging the US and China

The pan-European solution will challenge the dominance held by US card issuer giants – Mastercard and Visa – in Europe. It will also pose another barrier to Big Techs such as Alipay and WeChat trying to break into the region.

“The government is trying to stimulate commercial activities,” Lu Zurawski, consumer payments practice lead at ACI Worldwide and a member of one of the EPI boards, told FinTech Futures last year.

“In the past 20 years, policies clearly haven’t been very good, so now it’s trying to create the environment for commercial success.”

Last year, the EPI – which is headed up by Oliver Wyman partner and former Deutsche Bank director, Martina Weimert – said it expects the solution to be in operation by 2022.

Its initial member banks spun five European countries. These include Belgium, France, Germany, the Netherlands and Spain. Now with another 15 members, the EPI additionally covers countries such as Poland, and Finland, according to its website.

In November last year, European payment giants Worldline and Nets became shareholders in the EPI. It’s unclear how this interim company will evolve along with the interests of its stakeholders once the solution is developed.

How will it help?

The EPI believes that the new payments system will help drive the switch from cash to digital. Last year, the body said more than 50% of retail payment transactions in Europe still happen in cash.

Pushing “a truly European solution”, the EPI wants more consumers to pay digitally around Europe and to help more merchants accept digital payments.

In theory, it should also help European merchants. The system would wipe away Visa and Mastercard’s fees, though Europe’s banks will want to make their own profit

The fact that this will likely be one flat percentage fee – rather than varying fees depending on card providers and schemes – will however help merchants.

In a broad sense, the EPI hopes that a pan-European system will strengthen both the Single Market and the continent’s cohesive digital agenda.

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