Having combined their expertise for the past two years, EPI’s shareholders, BFCM, BNP Paribas, BPCE, Crédit Agricole, Deutsche Bank, DSGV, ING, KBC, La Banque Postale, Nexi, Société Générale, and Worldline, continued on their track to building a pan-European payment system and interbank network to rival incumbent card schemes, and eventually replace national European payment schemes such as France's Carte Bancaire and Germany's Girocard. Recently, four new shareholders have joined, namely Belfius and DZ Bank, at the end of 2022, along with now Dutch banks ABN Amro and Rabobank.
On 25 April, EPI Company announced its acquisition plans of iDEAL and Payconiq International, new shareholders, and the upcoming launch of its instant payment solution. As per the information detailed in the press release, EPI (European Payments Initiative), iDEAL and Payconiq International (PQI) are set to collaborate towards realising EPI’s vision of setting up a new, innovative, and unified payment solution for Europe.
Through the acquisition, we will aim to help EPI bring the foundation of a robust European instant payment system into play. iDEAL is an Account-to-Account payment system – local but with a competitive European framework. We bring volume, a great proposition, and the proven experience of an expert team with key knowledge, which EPI can leverage further. On the other hand, EPI in itself brings, of course, the overall governance making up the driving force to realise a true European system.
For us, it's an amazing step forward. What we need to clarify, however, is that we are merely setting a foundation and it is not iDEAL becoming European. We bring technology and the right set of skills to the scaling and development of EPI.
From a Dutch perspective, iDEAL is already ingrained in our day-to-day lives. We use the SEPA credit transfer as a go-to means of transferring funds. Moreover, we are seeing a push towards SCT Inst on a European scale. With more countries joining in EPI, SCT Inst will be the cornerstone of the Account-to-Account online payment system which is EPI now.
Considering these last acquisitions, how would you comment on EPI's full European adoption? How will EPI come to full European adoption, similar to SEPA? How will it reduce fragmentation?
For iDEAL, in the short term, nothing will change in practical terms. We will continue to roll out the so-called new iDEAL in the Netherlands, whereby we add functionalities, as well as a central platform, which has already been launched and is now active in the market. We do foresee that we will continue in the same working parameters for a significant number of years, and in the mid to long-term, we expect to see iDEAL's volume transitioning into an EPI system, if it will, at that time, still be called EPI.
Regardless of the specifics of this possible evolution, it is imperative that we be open, as we've learned from the past that sticking to the iDEAL brand might not always be the right way forward for us to really become European. So if EPI will be able to come up with a great brand, which would be even stronger than iDEAL, then we are fully open and aware that we need to evolve at a consistent pace with the market as well.
Our assumption is that short-term nothing will change for Dutch merchants, but in the long and even midterm, for larger international operating merchants headquartered in the Netherlands, this move will create efficiencies of scale. Under this new paradigm, merchants can expand their use of the EPI payment scheme to more countries than they can with IDEAL.
Then, of course, there is the need to achieve efficiency of skill. I am strongly convinced that we can achieve a faster pace in terms of adding new innovations to EPI as much as we are currently bringing them to the iDEAL network. Therefore, for the merchants, our sustained efforts will create additional benefits around value adds such as scheduled and recurring payments and Buy Now, Pay Later propositions going forward.
We need to follow the organic evolution of the EPI and be attentive to the most frequent requests coming from merchants. Nevertheless, consumer adoption will be a crucial factor in EPI's scaling.
Overall, there are several benefits that the merchant community can expect in the future. We are hearing large Dutch merchants responding to the acquisition by saying that they are happy with the announcement, now being able to expand into other countries without changing their checkout page.
The SEPA Payment Account Access is another European attempt to unite schemes through interoperability. The same goal stands at the basis of the European Mobile Payment Systems Association (EMSA). In the end, however, we are not simply becoming part of EPI, we are consolidating into one strong European payment system that creates far more benefits for the overall community in this format. Therefore, the key differences lie not only in the economic perspective but also in what EPI offers and its reach.
Both initiatives come with the same proposition and EPI will not be overruling SPAA at all, because this will create room for competition. Moreover, there will be room for future partnerships, because, in the end, it's all about creating that reach across Europe. And there are numerous ways to get there.
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