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  • Thierry Spanjaard

EPI drops its card!

The European Union has built regional standards in many fields and integration is going on thanks to a combination of regulation and technology. However, it is still lacking an integrated payment system. One may remember, there has already been numerous attempts to create an integrated European payment scheme. The latest one, EPI, European Payment Initiative, was launched in 2020. A few months ago, EPI – The European Payments Initiative (EPI) – announced it had reduced its ambitions and was only planning to issue a physical card and a digital wallet.

Now, the EPI Company has dropped the card project and is concentrating on the wallet. They present their project as a "multi-faceted digital wallet solution and an instant, account-to-account payment means under one brand, unified across European countries." They will be building upon the existent instant payment infrastructure to provide all currently fashionable services: person-to-person (P2P) and person-to-professional (P2Pro) payments, then online and mobile shopping payments, and later point-of-sale payments. They also plan to propose subscriptions, installments, payments upon delivery and reservations and ‘Buy Now, Pay Later’ (BNPL) financing, digital identity features and integration of merchant loyalty programs. The EPI company says it is planning to run a P2P payment pilot by the end of 2023 in France and Germany but does not announce any schedule for upcoming features.

EPI anticipates its solutions will serve as a foundation for the fulfillment of the European Commission’s and European Central Bank/Eurosystem’s pan-European retail payments strategy. EPI Company CEO, Martina Weimert, is clearly positioning the company's solution as an alternative to card payments.

In addition, the EPI Company is in the process of acquiring the Dutch payment solution iDEAL and payment solutions provider Payconiq International (PQI) that could serve as a base for their wallet. Currence iDEAL is a major Dutch payment scheme, and Payconiq is a Luxemburg-based payment solutions provider that currently serves iDEAL in the Netherlands, Bancontact Payconiq in Belgium, and Payconiq in Luxembourg.

Even if EPI is part of the European institutional payment landscape, it remains a totally private initiative. EPI shareholders include BFCM, BNP Paribas, BPCE, Crédit Agricole, Deutsche Bank, DSGV, ING, KBC, La Banque Postale, Nexi, Société Générale and Worldline, along with newcomers Belfius, DZ Bank, ABN Amro, and Rabobank.

The EPI project is to be seen in relation with the Digital ID and Digital Euro, although consensus on these projects still seems out of reach. The European Commission presents its EU Digital Identity Wallet (EUDIW) as a means for EU citizens, residents, and businesses to identify themselves or provide confirmation of certain personal information. The ID Wallet will allow both online and offline public and private services across the EU. Of course, when a Digital ID infrastructure is set up, one can be tempted to use it as a basis for a payment system. The European Payment Council (EPC) plans to use this new infrastructure as a Strong Customer Authentication (SCA) means. For instance, the European Digital Identity Wallet could be used to authorize payments for products or services online and at physical points of sale.

The Digital Euro is also in the making. The European Central Bank (ECB) foresees the Digital Euro as an electronic means of payment that anyone could use in the Euro area; it would be secure and user-friendly, like cash is today, they say. This would mean a stronger role would be played by European public bodies in payment.

However, not everyone is ready to accept this! The European Credit Sector Associations (ECSAs), which include The European Banking Federation, the European Association of Co-operative Banks, and the European Savings and Retail Banking Group, published a statement in which they call on the European Parliament and the Council to reconsider the inclusion of payments in the upcoming European Digital ID project. The ECSAs are questioning the interpretation of the wording in the legislation that suggests that the entire payment sphere should be included in eIDAS 2.0 on a mandatory basis.

What is actually at stake is the balance of power between public and private entities. Financial institutions have built large lobbying powers in the EU to influence all future developments. With so many players, the future of European payments is far from being clear. Division only profits to those waiting in ambush: our usual suspects, the international, read US-based, payment schemes.

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