In a continued wave of nationalism, 16 banks across Europe announced their plans to build a European-based payment network and decrease their dependence on American and Chinese companies. Ever since the development of a real-time payments infrastructure in Europe, policy makers have pushed for a solution to replace Mastercard, Visa, AliPay and other non-European payments providers. The banks involved are looking to launch a product in a mere 2-years’ time frame.
A launch is one thing, but having all issuer systems adjusted to issue new card credentials, establish authorization systems and reconfigure settlement to accommodate a new network will take time. Merchants and their acquirers will similarly need to make significant adjustments. I suspect that a new European network will exist alongside the global networks as they work to create scale.
Here’s what an article posted on Reuters had to say about the matter:
European Union policymakers and central bankers have long sought a “home grown” rival to take on Mastercard and Visa from the United States, and more recently tech giants like Alipay and Google. But this has not happened even though real-time payments have been possible in the euro zone since 2017.
The European Central Bank on Thursday welcomed the banks’ decision to launch the unified European payment system by 2022, after advocating for years an industry-driven solution to compete with the likes of Mastercard and Visa.
“It is aimed at strengthening Europe, at making it more independent and robust,” said Thierry Laborde, deputy chief operating officer of French bank BNP Paribas, which is part of the project.
The so-called European Payments Initiative aims to become a new standard means of payment, offering a card for consumers and retailers across Europe, the statement from the 16 banks said.
It will cover all types of transactions including in-store, online, cash withdrawal and ‘peer-to-peer’ in addition to existing international payment scheme solutions.
Banks that have already signed up include BBVA, BNP Paribas, Commerzbank, Deutsche Bank, Santander, ING, UniCredit and Societe Generale.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
