Frankfurt, Madrid The struggle to introduce a new European payment system (EPI) is dragging on. At a meeting last Tuesday, the financial institutions involved in EPI could not agree on the release of the required investments of 1.5 billion euros, as several people familiar with the topic told the Handelsblatt. The approval of around 80 percent of the participants would have been required for implementation.
Another meeting should take place at the end of November. According to insiders, those involved would be satisfied if two thirds gave the green light and made the investments necessary for EPI. Until then, there should be several bilateral talks with the banks, which so far have reservations. In addition to the Dutch institutions, this includes above all the Spanish financial institutions, which see a need for clarification on various points.
31 banks and two payment service providers are involved in EPI. Its aim is to make the European financial sector less dependent on powerful US corporations such as Mastercard, Visa and Paypal by building a uniform payment system.
However, it remains to be seen whether the institutes involved will agree on the key points and approve the necessary investments. “The industry is in the process of defining what the business model would be,” said José Antonio Álvarez, CEO of the major bank Santander, on Wednesday. “It’s also about how we integrate what we currently have into this potential initiative, if it should exist.”
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Specifically, Álvarez named the cell phone-to-cell phone payment system Bizum, which already has 17 million customers in Spain and the financial institutions have invested a lot of money in building it up. The Spanish banks do not want to simply write off these investments. EPI, on the other hand, is reluctant to integrate national systems, because financial institutions from other countries naturally also want to contribute their own solutions.
“It is pulled at every nook and cranny,” says a person familiar with the discussions. Like other parties involved, she is confident that an agreement will be reached on EPI in the end – whatever the composition. The fact that some of those involved at the meeting on October 26th had not yet agreed is also seen by some as a negotiating tactic.
Sparkassen and Deutsche Bank are on board
The major Spanish bank BBVA emphasized that it was actively involved in EPI. However, there are still a few points that need to be worked on. “We hope that this can be completed in the coming weeks.”
About a dozen financial houses from Spain are part of the EPI interim company, as well as a number of small regional credit institutions in addition to the major banks. From Germany, the Deutsche Bank, Commerzbank, DZ Bank and the savings banks are also involved.
The savings banks have already positioned themselves clearly. They want – provided there is a significant contribution from other banks – to provide around 150 million euros for EPI.
Deutsche Bank is also clearly behind EPI. From a European point of view, it is important to establish an independent payment system, the institute explained. “Deutsche Bank has therefore joined the EPI-Zwischengesellschaft as a founding member to support this joint effort.”
The French banks are also seen as supporters of the EPI. According to financial circles, they are willing to make the necessary investments – if necessary with a smaller group of fellow campaigners than previously targeted.
Moderate central banks
By introducing EPI, the banks involved want to prevent the European payment systems from being dominated by US companies such as Mastercard or Visa. Mastercard has just announced that it will phase out the Maestro system, which is used for cross-border card payments in Europe. Some financial institutions see this decision as evidence that they urgently need to get rid of Mastercard.
The central banks act as moderators in the talks. Some politicians are also campaigning for the project to be successful because they see EPI as an important project to strengthen the European financial market and reduce dependence on foreign providers.
The previous EPI plans provide that, in addition to a physical payment card that is at least EPI-compatible, there is a digital wallet – in technical jargon wallet – with digitized payment cards. In addition, EPI should enable online payments as well as cell phone-to-cell phone payments and thus also counteract the online payment service PayPal. The new payment system will be based on real-time payments.
More: Girocard soon without Maestro function: Mastercard expires system for international payments.