Voice of the Industry

Southern Europe at the crossroads of innovative payments

Tuesday 23 November 2021 07:24 CET | Editor: Anda Kania | Voice of the industry

How does payment innovation look in Spain, Italy and Portugal? Andréa Toucinho of Partelya Consulting shares her view on how EPI, CBDCs, and instant payments will  take root in these countries 

With so many initiatives on CBDC, instant payment, EPI, Southern Europe is nowadays engaged in a huge transformation of payments uses. Among the key countries, Spain has shown its ambition to be at the forefront of European projects. At the same time, Italy is one of the main European countries to work on CBDC. Last but not least, Portugal has presented in 2020 a strategic plan composed of four pillars and twelve concrete actions to modernise payments uses in the country. 

Announced in July 2020, European Payments Initiative (EPI) aims at creating a pan-European payments solution. Launched, in the beginning, by sixteen banks from five European countries – France, Belgium, the Netherlands, Spain, and Germany – EPI is now building its strategy in relation to operational actors of the European payments ecosystem. 

Spain: one of the major actors of EPI project 

The European position of Spain, in the field of payments, is not a surprise if we refer, for instance, to the engagement about Target Instant Payment Settlement (TIPS) in 2018. At that time, the European payments market was launching a new mean of payment: instant payment. Convinced of the necessity to guarantee the European reachability of this new tool, European Central Bank (ECB) created TIPS. Among the first countries to adopt this tool were Germany, France, and Spain. The first real European instant payment was made, on 30 November 2018, by a Spanish bank (La Caixa) and a French one (Natixis). Until now, several Spanish actors launched instant payments as a new attractive tool. Its neighbour country, Portugal, adopted in 2020 TIPS to accelerate truly European instant payments in the country. 

This position testifies to the evolution of these two countries, historically linked with an international vision (Latin America, Africa), about a European payments strategy. Another important aspect is the creation of a European fintech alliance, based on the same principles as the Ibero America Alliance launched in 2016 between the Latin fintech association and the fellow organisations in Spain and Portugal. 

Confronted with the acceleration of European strategy in the field of payments, and more precisely with EPI operational project, Spain is among the forefront countries of European strategy in the field of digital. After the launch in July 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, PKO Polski, and two new Spanish actors: Spanish Banking Consortium and Banco Sabadell. According to several Spanish actors, there is an important link between innovative payments and the opening of the market, above all since the adoption of the sandbox in September 2020 in Spain.

Italy: an experimental approach about CBDC

Italian fintech sector, which also adopted a sandbox in 2019, is also confronted with a huge evolution in the payments field. One of the major topics addressed by the Italian association of banks (Associazione Bancaria Italiana – Abi) is Central Bank Digital Currency (CBDC) considered not only as a real new innovative tool, but also as a way to foster the possibilities of blockchain technology in the payments sector. Abi announced in December 2020 its project to work on CBDC in order to contribute to European debates about this topic. The experimentation is done with some Italian banks and Abi research lab. Another key issue of the Italian payments market is Open Banking, which is considered today not just as a compliant project linked with PSD2 migration, but also as a real opportunity to foster new uses and models. This position is not surprising if we refer to Italian proactive strategy in the field of instant payment, a few years ago. Italian banks considered, at that time, instant payment as a new tool and a real asset to foster the migration of some consumers (professionals, young generations etc.) towards electronic uses.

Portugal: a strategic plan 

In Portugal, instant payment experienced a real boom in terms of uses last year, with a growth of 81% of volume and 50% in value according to some figures shared by Banco de Portugal at the beginning of 2021. The Portuguese payments ecosystem is now working on the evolution of uses in the country. The goal is to promote electronic means of payment. Among the pillars of the 2020-2022 strategy: promoting information and communication in Portuguese society, reinforcing the benefits of digital transformation, contributing to a regulatory framework ensuring innovation and efficiency, and promoting the adoption of secure payments uses. This plan implies twelve concrete actions based in the promotion of contactless and instant payment as ‘new normal’ as it is already the case in The Netherlands, reinforcing the decline of checks payments, and boosting the development of ecommerce, SEPA Direct Debit, and more efficient payments toward public administration. Concerning this last point, several Portuguese professionals consider request-to-pay as a real tool to modernise payments towards administration, especially if we already know that this new solution is seen at a European level as a real ‘catalyst’ of instant payment and a ‘game-changer’ for the market.

This article is part of the Payment Methods Report 2021 – Latest Trends in Payment Preferences, a comprehensive overview of the payment methods in scope for 2021, as well as best practices for checkout optimisation and customer conversion by addressing digital transformation, security, and localisation.

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 2020 by Wiley. 

 


About Partelya Consulting

Created in 2008, Partelya Consulting is a French innovative consulting company specialised in means of payment and IT that contributed to various projects in the field of payments for companies and financial institutions.


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Keywords: EPI, CBDC, instant payments, payment methods
Categories: Payments & Commerce | Online Payments
Countries: Europe
This article is part of category

Payments & Commerce