Deutsche Bank and Sparkassen drive new EU payment system EPI

Frankfurt, Madrid Despite setbacks, Deutsche Bank and the savings banks want to fight for the establishment of a new European payment system (EPI). “By setting up an independent system, we want to strengthen the competitiveness of European banks in payment transactions,” said Deutsche Bank Vice President Karl von Rohr to the Handelsblatt.

“That’s why we stand by the project and are ready to push EPI 2.0 forward together with the remaining partners,” said von Rohr. “Whether it comes to that in the end is of course not just up to us.”

From the point of view of Joachim Schmalzl, board member at the German Savings Banks and Giro Association (DSGV), EPI is “a great opportunity to decisively develop payment transactions in Europe and to strengthen Europe’s sovereignty and its international competitiveness”. That is why they are promoting “the broadest possible support”.

The prestige project was launched in 2020 by numerous major European banks. The aim is to create its own payment system in order to become more independent of powerful US corporations such as Mastercard, Visa and PayPal. The governments and central banks in Germany and other European member states support the project because they believe it would be important for strengthening the European EU financial market.

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Schmalzl emphasized that the European Payments Initiative (EPI) would become all the more successful and powerful the more participants gathered behind the project. In addition to his role at DSGV, he is head of the supervisory board of the so-called EPI Company, which is preparing the development of the new payment system.

EPI investment


billion euro

have estimated the participating banks for the project.

In February, however, the majority of the banks originally involved, including a number of small Spanish financial institutions, withdrew from the project – partly because they did not want to make the estimated investment of 1.5 billion euros. The German cooperative banks got out at this point because they did not agree with the original orientation of EPI.

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EPI originally wanted to establish a new payment system with a separate payment card. This should replace the different cards in the respective countries. In Germany it would have been about the Girocard, better known by its old name “EC card”.

Since then, the remaining eleven banks and two payment service providers have been working on plans for a slimmed-down version of EPI. The existing cards should be able to be stored in the EPI wallet.

Intensive wooing for the comrades

The core of the slimmed down version is a so-called wallet. On the smartphone, this would be a special app that consumers can use to use various payment options. These included mobile-to-mobile payments, payments for online shopping and at the checkout.

“We will decide again in the course of the year whether we will be there or not.” DZ Bank co-boss Uwe Fröhlich

However, the cooperative banks can now imagine participating in this revised EPI version again. “We will decide again in the course of the year whether we are there or not,” said DZ Bank co-boss Uwe Fröhlich at the end of August.

Behind the scenes, the cooperative banks are being courted intensively because, from the point of view of those involved, they play an important role in the progress of the project. According to financial circles, if the comrades are there, Commerzbank could also rethink, because otherwise it would be the only significant institute in Germany to be left out.

A Commerzbank spokeswoman said there was no new status on the subject. The institute continued to support EPI openly. “If there is a new basis for decision-making, we will look at the issue constructively.”

EPI receives prestigious ECB contract

After the most recent internal rounds of talks, some of those involved are becoming more confident that the project will finally be implemented after years of deadlock. “I think it’s heading in the right direction,” said an insider. “The chances of it coming are greater than 50 percent.”

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According to financial circles, talks are now being held again with several European banks that canceled their participation at the beginning of the year – including in the Netherlands. Insiders expect a decision on whether to set up their own payment system in November. Since numerous deadlines have already been missed for the project, no one wants to commit to a specific date.

In addition to Deutsche Bank and the savings banks, Crédit Mutuel, BNP Paribas, Crédit Agricole, Groupe BPCE, La Banque Postale and Société Générale from France, ING and KBC Bank from Belgium and Santander from Spain are currently involved in the project. There are also the two payment service providers Nexi from Italy and Worldline from France.

“We are involved in the project and hope that it will progress,” says Worldline boss Gilles Grapinet. “It still makes sense for Europe to set up its own European payment system.” For example, EPI could set the rules for real-time payments. Transfers are credited to the recipient’s account within seconds.

“It still makes sense for Europe to set up its own European payments system.” Worldline boss Gilles Grapinet

EPI supporters rate positively that the European Central Bank (ECB) selected the project last week to develop a prototype for the use of digital euros for payment at the checkout. From the point of view of those involved, this shows that the euro system can imagine cooperation with EPI in the event of the possible introduction of a digital euro.

Andrea Orcel: “The hurdles are very high”

In the banking sector, however, there are not only EPI fans, but also numerous skeptics. One of them is Andrea Orcel. The head of the major Italian bank Unicredit would find an independent European payment system great in theory. “However, the hurdles to building a competitive payment system in Europe are very high,” he told Handelsblatt.

The market leaders in payment transactions from the USA and China have been investing large sums in their platforms for years. “It would be risky and very expensive for European banks to build an alternative and catch up on the large technological gap,” warns Orcel. Without state support it is difficult to build up a competitive European offer. The federal government stressed in February that it would not provide any funding for the project.

“In addition, EPI would have to become a truly European project, without individual countries looking too much at their own interests,” demands Orcel. “Currently, it is mainly supported by banks from France, Germany and Belgium – and all of them are pursuing their own agenda.”

Andrea Orcel

According to financial circles, the Unicredit boss exchanged views with Commerzbank boss Manfred Knof around the turn of the year.

Unicredit does not want to participate in EPI at the moment. However, Orcel does not want to rule out participation for all time. “If EPI evolves into a truly European project, involving all banks and having any prospect of success, we would definitely reconsider our decision.”

Many Spanish banks are also currently reluctant to do so. EPI requires the construction of infrastructures and services, which involve high investments, some of which do not bring much added value on the Spanish market, explained the major bank BBVA.

The payment app Bizum is very popular in Spain, and the banks there have invested a lot of money in its development. BBVA therefore only wants to cooperate with EPI and advocates, among other things, that payments between EPI and Bizum should be possible.

More: Banks are worried about possible disruptions in payment transactions.

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