EPI: what are the main questions?

Payments expert Andréa Toucinho shares her view around the European Payments Initiative (EPI) across Europe and its impact on CBDC projects

Announced in July of 2020, European Payments Initiative (EPI) aims at creating a pan European payments solution. Launched, at the beginning, by sixteen banks from five European countries (France, Belgium, the Netherlands, Spain, and Germany), EPI is now building its strategy in relation with operational actors of European payments ecosystem. Among the key questions at this stage: the technological infrastructure, the business models, the evolution of governance, or even the information actions to build to integrate European consumer in this evolution.

EPI is a scheme and a pan European payments solution with a rather broad scope aiming to propose a solution for all major retail use cases under one strong brand in Europe. The scope integrates physical card, digital cards, and end-to-end SCT Inst. The idea is to cover POS, E/M commerce, cash withdrawal, and P2P. EPI also studies the integration of value-added services, such as digital ID or instant financing. According to the interim company created to manage the project, there are six key benefits of EPI for European retail payments:

1. Efficiency and harmonisation

2. Innovation

3. Bringing instant payment to live at a large scale in retail payments

4. Real alternative for consumers and merchants

5. European sovereignty

6. Open governance

After the launch in July of 2020, EPI extended its position to Poland and Finland. The interim company has now 22 shareholders (33 entities). Among the new stakeholders are Worldline, Nets Group, Spanish Banking Consortium, PKO Polski, and Banco Sabadell.

Several operational tasks

Concerning the agenda, EPI stakeholders aim at ending the project by 2025. This process includes several steps such as the launch of P2P payments by the first semester of 2022, the launch of a wallet by the second semester of 2022, and the projects linked with the European payment card ecosystem by 2024. These evolutions imply several operational tasks such as the creation of standards and the development of a real European approach in terms of specifications. We cannot also forget the creation of a technological support and some works in terms of branding and acceptations.

Another main question linked with EPI is the information actions to define in order to integrate the European consumer is this evolution. It is a huge step which requires the work of all the stakeholders of the market. This reality reinforces the idea that, if EPI was born thanks to banking actors, the success of the project depends on the capacity to integrate all the stakeholders of the market, from banks to retailers, fintechs or even IT actors. Especially if we consider that this European topic is more and more an operational issue, whereas it was yesterday above all a political project defended by European institutions. The other issue to consider is the integration of several European countries in this project, and not just the founding ones. Several European countries such as Italy or even Portugal are studying the project, so we can consider that EPI may be extended across Europe.

EPI vs CBDC?

Concerning business models, EPI represents a huge investment for the members of the project and it is interested in having some public support not only in terms of investment but also in terms of European level playing field. A stability in the field of regulation is also required, above all because the purpose of EPI is not just European context but also cross border. The idea is to create a real pan European infrastructure to reinforce European model at an international level.

Another main question linked with this relation between Europe and global context is the convergence between EPI and other projects in the field of payments like Central Bank Digital Currency (CBDC). It is important to remind that CBDC works in Europe are carried out by European Central Bank (ECB) and some national regulators like Banca d’Italia or Banque de France. The aim of this innovation is linked with digital transformation and evolution of uses, on the one hand, and financial stability, on the other hand. So, this innovation will participate in the works about European sovereignty in the field of payments. According to some professionals who work around EPI, CBDC is, nevertheless, very different from EPI since it is linked with central bank, whereas EPI appears like a real operational project. Consequently, the two projects may be developed in parallel.

About Andréa Toucinho

Expert in payments and financial services, Andréa Toucinho is Director of Studies, Prospective and Training of Partelya Consulting and Country Ambassador for France of European Women Payments Network (EWPN). France Representative of Aefi Spain and Afip Portugal, she realised several publications about payments and is one of the co-authors of The PAYTech Book published in January of 2020 by Wiley. Considered as one of the 50 leaders of the industry by Harrington Starr, she regularly participates in European and international events about payments and innovative financial services (MPE, MoneyLive, Web Summit, Africa Pay ID Expo...) and organises events and trainings about payments at a French and European level.