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European banks seek technical partners to help build rival to Visa and Mastercard

European banks seek technical partners to help build rival to Visa and Mastercard

The European Payments Initiative, a bank-backed joint venture that aims to build a rival to Mastercard and Visa, has put out a Request for Information for 'qualified technical partners' to help build its central infrastructure.

Backed by 31 major Eurozone banks and acquirers Wordlline and Nets, the EPI is striving to create a unified pan-European payment system, offering a card for consumers and merchants across Europe, a digital wallet and P2P payments.

Expected to enter the operational phase in 2022, the coalition established the EPI Interim Company in Brussels in July, with the intention of setting out clear deliverables including the completion of the technical and operational roadmap.

EPI is currently assessing how the necessary central infrastructure could be obtained, or built, and how best it should be operated, "to sustain all the necessary scheme functions and needs, as well as the solution needs of the technical entity, in relation to the payment products EPI intends to deploy".

States the EPI: "In particular, determining the financial aspects of the different options for the setup, and the run of the central infrastructure is critical for allowing proper decisions and choices."

The entity is calling on potential partners to submit proposals under the RfI by 1 March.

This will be used to establish a longlist of poptential participants, who will be invited to submit a formal Request for Proposals later in 2021.

Comments: (3)

Andrew Smith
Andrew Smith - RTGS & ClearBank - London 24 February, 2021, 09:553 likes 3 likes

As ever this is far too late. Why would I want a card that would only really work with certain acquirers, unless they believe they will get all the major acquirers globally onboard? This could be the case, but by 2022 this will be highly limited.

All this at a time when it is pretty clear that the way the card schemes operate is a legacy model. Just as the Eurozone looks to introduce new card schemes, alternative payment rails are gaining traction and even Visa and MasterCard are looking at alternative models...

A Finextra member
A Finextra member 24 February, 2021, 14:011 like 1 like

Great, will that mean things become cheaper to buy in shops for consumers? I assume there will be multiple prices going forward for Cash, 'eurozone scheme' and 'Visa/Mastercard et al'?

Jeremy Light
Jeremy Light - Independent - London 24 February, 2021, 20:333 likes 3 likes

There are very little details about EPI released publicly, but as the RFI states, EPI is based on SCT Inst, so at its core it is an account-to-account credit transfer payment system, rather than a legacy-style card system, which makes it very different and very interesting compared to previous attempts for a European payments solution (Monnet, Berlin Group, Payfair).

A great model for EPI is India's payments infrastructure run by NPCI  which has a switch (old style ATM) for clearing (NFS), supporting an instant mobile payment service (IMPS), which supports the universal payments interface (UPI) giving API access to Fintechs and banks, and innovations such as digital wallets. UPI volumes are enormous and have grown very quickly, so opening up the infrastructure clearly works. Hopefully, NPCI's international arm will be bidding for this, they have delivered a fantastic system for India.

Building something similar (but on more advanced technology in the clearing and settlement layer) would give European payments a huge boost and set it up for decades.

I am unsure though that a centralised infrastructure is a good idea. A distributed architecture (using blockchain type technology) would be a cheaper, more resilient system, faste to implement and easier to innovate on. Especially with the digital euro on its way... 

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