10 September 2020

European Payments Council: EPI: towards a new European payment solution?

Some European banks announced the launch of the European Payments Initiative (EPI) to create a unified payment solution for consumers and merchants across Europe. It has the ambition of leveraging the Instant Credit Transfer - the new pan-European standard of payments.

Q. How would you describe the European Payments Initiative (EPI) for those unfamiliar with the topic? 

EPI is an initiative launched by banks to assess potential ways of creating a pan-European payment solution leveraging and addressing the largest use cases for consumers and merchants. This solution should be attractive and competitive, with the goal of making it a new standard for payments in Europe.

Sixteen banks from five euro-countries have been working for over a year to verify the feasibility  of the idea and are now in the process of setting up an interim company for the next nine to twelve months that will bring answers to questions related to

• the creation of EPI HoldCo;
• the European Payments Initiative (“EPI”) Scheme Entity; 
• the creation of the EPI technical entity; 
• the development of a common view on the product development and roadmap of the EPI project;
• the development of a common view on the marketing and sales roadmap of the EPI project; 
• the refinement of the business model and business case; 
• the conclusion of deals with key third-parties

This first formal step will ensure a controlled and successful roll out of the solution and allow for a smooth migration to the target company.

Q. What led to the creation of this initiative?  

Banks received a clear message from the European authorities urging them to deliver an innovative and independent payment scheme at European level.

Sharing the view that payments are key in their customer relationships and retention capacities, banks decided to launch EPI in a market currently dominated by a few big international and mostly non-European players. 

The work so far has been shared with the European Commission, the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) and DG Competition (DG COMP), the European Central Bank (ECB) and the Eurosystem to ensure that the outputs comply with the thoughts and ambitions of the regulators and competition law.

Q. What are the founders’ expectations for the development of the EPI? When is it planned to become operational and achieve critical mass?

The founding banks will set up an interim company by the end of September 2020 and aim to register the target company in the last quarter of 2021. The solution is to go live in the first quarter of 2022 with a three- to four-year migration phase. We insist that the solution should not cause major changes in our customers’ habits. The issuers’ commitment to ensuring that the solution speeds up their customers’ equipment will be paramount in convincing the merchants to accept it. 

The acquirers will also have a very crucial role to play in easing and accelerating the set-up of a real pan-European acceptance network. 

A base of five countries is, of course, not enough to make the project pan-European. That is why we shall open a window to allow new players to join as shareholders as rapidly as possible. 

We have already received requests from a number of banks and non-bank acquirers about the conditions for adherence to and participation in the interim phase. We hope that we shall convince some of them to jump in promptly.

Q. What are the main benefits of the EPI for consumers and merchants across Europe? 

EPI wants to bring value to the market by offering an end-to-end payment solution leveraging SCT Inst">

as defined by the

and covering multiple use cases in a secured environment. 

Consumers will enjoy a universal payment solution through a well-known interface – i.e. a plastic card but also a digital wallet with a card or an SCT Inst">

payment capability. 

Merchants will benefit from a cost-efficient pan-European scheme (e.g. cost reductions when talking about the deployment of an acceptance network across different

countries) and providing the security and payment guarantee as needed.

Q. How do you see the EPI evolving in the coming years? 

We are now entering in an interim phase to secure the launch of the scheme.  

We believe that Europe and European citizens deserve a European payment solution, but EPI’s success will rely essentially both upon the adherents’ commitments to enroll their customers on the issuing and acquiring sides and their capacity to keep it at the state-of-the-art in terms of service and user experience.

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