Implementation proves more difficult than the principles. SEPA is actually a combination of payment instruments: SEPA Credit Transfers (SCT) that deals with credit transfers in euro between banks, SEPA Direct Debit (SDD) that covers direct debits in euro between users through their banks and SEPA Card Framework (SCF) that pertains to the payment card industry. ECB decided to start with SCT and SDD. What is to be started early November is actually a subset of SDD: SEPA Direct Debit Core Scheme and the SEPA Direct Debit Business to Business Scheme. According to the EPC, 2,607 banks, accounting for nearly 70% of SEPA payment volumes, have so far signed up to these new schemes and are ready to roll out SEPA Direct Debit (SDD) services.

On the other hand, SCF is still up in the air. Technology is ready, and with the gradual EMV migration of all European countries, availability of cards, terminals and payment infrastructure is not an issue. The future card scheme needs to ensure a total interoperability, and also a sufficient level of competition to guarantee a fair market for end consumers. Gertrude Tumpel-Gugerell, executive board member at the European Central Bank (ECB) said recently “Europe needs Visa and MasterCard since they are the only schemes that offer a pan-European card payment solution. But we also need sufficient competition”. As no one even dreams of displacing Visa and MasterCard, competition is open to become the “third scheme” for cards:

  • EAPS (Euro Alliance of Payment Schemes) was created by six major regional card schemes in Europe :ConsorzioBancomat (Italy), Eufiserv (Europe), Euro 6000 (Spain), Link (UK), SIBS (Portugal), and ZKA (Germany).
  • Monnet, is positioned as a project designed to provide European's with a independent debit system. Monnet includes a number of French and German banks are involved in the project, including Deutsche Bank, Deutsche Postbank, Commerzbank, WestLB, BanquePopulaire, Caissed'Epargne, La BanquePostale and SociétéGénérale.
  • Payfair, an independent company, positions itself as “the most cost efficient card payment solution to the new European Payment Market ». Payfair objective is to create a European Card Scheme that will provide merchants with transparent and low transaction costs generate substantial cost savings for merchants, and will be accessible to consumers though banks or large retailers on a pan European basis.

What will be the future European payment landscape? We, Europeans, have to move quickly if we want to make sure not all our transactions will be processed under the control of companies based in Foster City, California, or in Purchase, New York.

Thierry Spanjaard

Chief Editor

Smart Insights Weekly