18 January 2016

ECB's Mersch: Growth potential and competition – what lies ahead for card payments?

Speech by ECB's Yves Mersch in which he highlights three areas critical to the realisation of the SEPA for cards: standardisation, interoperability and security. Mersch also talks about innovation and how it will impact cards.

Speech by Yves Mersch, Member of the Executive Board of the ECB, at the Banque de France Conference on card payments in Europe – latest trends and challenges,
Paris

While cards are the predominant electronic payment instrument, it should be noted that cards – like cash – were initially designed for face-to-face payment situations. Given the strong growth in e-commerce, the necessity of finding appropriate and innovative solutions for new payment situations, i.e. internet or mobile payments, has become apparent. The incidence of fraud related to purchases made over the internet, which involve “card-not-present” (CNP) transactions, has been a source of concern and needs to be addressed by appropriate security measures.

In general, innovative payment solutions, regardless of whether they are based on cards or other payment instruments, will have an impact on payment behaviour and the usage of cards and other traditional payment instruments in the years to come.

Nevertheless, there is no doubt that card payments are here to stay. Moreover, there is still a huge growth potential for card transactions in the EU. To unleash this growth potential, the SEPA for cards has to be realised. A harmonised, competitive and innovative European card payments area must be achieved by means of standardisation, interoperability and appropriate security measures. Card schemes and card processors that want to stay in the market have to become pan-European.

At the same time, innovative payment solutions will pose a challenge to the cards industry. It will face competition from instant payments based on the SEPA credit transfer, from payment initiation services in the area of e-commerce and from the adoption of distributed ledger technologies. This competition is welcome, provided the solutions offered in the market are secure and efficient and service providers play by the same rules. Mr Mersch is confident that the cards industry will find the right responses to these challenges – and to the benefit of users.

Full speech

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