European Payments Initiative promises new cashless payment solution to rival global card schemes and stablecoins

16 European banks have officially launched the 'European Payments Initiative' to create a pan-European card and digital wallet for in-store, online and peer-to-peer payments. The initiative has been strongly supported by the European Commission and the European Central Bank and will be built on the Eurosystem’s recently rolled-out instant payment settlement infrastructure. Other payment service providers are invited to join as founding members by the end of this year.

Official launch of the European Payments Initiative

An initiative to create a pan-European retail payment solution has now been officially launched by a consortium of European banks. The project, previously referred to in the market as the Pan-European Payment System Initiative (or “PEPSI”), aims to create a card and digital wallet for in-store, online and peer-to-peer payments, as well as for cash withdrawals. Importantly, it will be designed for use across Europe, having a key objective to reduce fragmentation and promote the European single market.

The bank consortium comprises: BBVA, BNP Paribas, Groupe BPCE, CaixaBank, Commerzbank, Crédit Agricole, Crédit Mutuel, Deutsche Bank, Deutscher Sparkassen- und Giroverband, DZ BANK Group, ING, KBC Group, La Banque Postale, Banco Santander, Société Générale and UniCredit. 

Privately led, publicly backed

The initiative has received strong support from the European Central Bank as well as the European Commission, which rolled out a new Retail Payments Strategy last November. 

Both authorities have been looking to promote solutions that could limit EU dependency on foreign players (including international card schemes and Big Techs), support the role of the Euro on the global stage and reduce fragmentation across Europe. The ECB flags, for example, that ten European countries currently have national card schemes that do not accept cards from other EU member states.

In a speech last November, ECB Executive Board member Benoît Cœuré called on European stakeholders to “to step up their collaboration and act together to provide payment solutions that both reflect the demands of consumers and strengthen the Single Market”.

Cue the European Payments Initiative. 

Leveraging European instant settlement infrastructure 

The EPI will be based on the SEPA (Single European Payments Area) Instant Credit Transfer scheme. As such, it will utilise the Eurosystem’s TARGET Instant Payment Settlement (TIPS) system, which enables the instant and irrevocable settlement of Euro payment transactions 24/7 and across the EU. TIPS was launched in 2018 in response to growing consumer demand for instant payments and the emergence of national solutions posing fragmentation risks.

Next steps

The EPI expects to commence implementation in the coming weeks, beginning with the establishment of an interim company and a technical and operational roadmap, before finalising its corporate structure. It has invited other payment service providers to join the initiative as founding members before the end of 2020 and is aiming to become operational in 2022.   

Meanwhile, in the UK

UK authorities have also been focused on addressing evolving consumer needs in retail payments. Last month the Bank of England closed its consultation on a “platform model” central bank digital currency for retail use. Work also continues on developing the New Payments Architecture to replace the UK’s retail interbank clearing and settlement systems.