First Data expands in Europe
Eufiserv formerly operated an ATM card scheme that provides cardholders from member banks with access to cash at more than 60,000 ATMs in nine European countries. In line with SEPA requirements, the Eufiserv card scheme has already been spun off into a separate company, Eufiserv Payments SCRL. Upon closing of the transaction, First Data will acquire a 50% equity stake in Eufiserv's interbank processing business, which will be renamed to reflect the new joint ownership structure. Ernst Verbeek, currently Vice President, Interbank Processing Services at First Data, and Petter N. Johansen, currently Managing Director at Eufiserv, will be appointed by the shareholders, as Managing Director and Chairman respectively. A new Board of Eufiserv will be made up of the Chairman, the Managing Director and representatives from the original Eufiserv shareholders and First Data.
Eufiserv, which is based in Brussels, provides inter-bank switching of Point of Sale (POS) and Automated Teller Machine (ATM) transactions, including authorization, clearing, settlement and value-added services to payment card issuers, acquirers and payment schemes. Eufiserv together with First Data will further develop these services which will be compliant with the Single Euro Payment Area (SEPA) framework requirements.
Originally created by the European Savings Banks Group, Eufiserv is an international telecommunications network facilitating cross-border ATM transactions for and between European banks. Eufiserv operates gateways to Visa, MasterCard, American Express and China Unionpay networks. Eufiserv plans to take advantage of SEPA regulations that create a class of "Payment Institutions". Connecting the existing networks of Eufiserv and First Data will create the opportunity for customers to access more than 74,000 ATMs, 1.5 million POS merchants and to reach more than 165 million debit and credit card accounts in Europe.
Eufiserv has already played an important role in SEPA implementation when it joined with five other European card payment schemes to set up the "Euro Alliance of Payment Schemes (EAPS)" (cf. Smart Insights #07-46). The other founders of EAPS are CO.GE.BAN for the Pago Bancomat scheme and Bancomat scheme (Italy), EPCS European Payment Card Solution GmbH for the electronic cash scheme and Deutsches Geldautomatensystem (German ATM scheme) (Germany), EURO 6000, card payment scheme (Spain), LINK Interchange Network, ATM scheme (UK), Sociedade Interbancaria de Servicos (SIBS), for the Multibanco scheme (Portugal).
As creating a new payment network from scratch sounds nearly impossible, Eufiserv, with its Europe wide POS and ATM network was seen as a potential answer to reiterated demands by the European Central Bank (ECB), the European Commission (EC) and the European Payment Council (EPC) for a European Payment scheme that would not be directly linked to the US like Visa and MasterCard. Now, with this combination with First data, Eufiserv may have acquired the means to develop into a third payment scheme, but it can no longer be considered as independent from the US.
According to analyst Andrew Jeffrey, First Data also considers taking over VeriFone (cf. Payments section).