The planned European Payments Initiative a pan-European payments network backed by 22 banks which aims to set up as serious competition to Mastercard and Visa has launched an official appealed for public money, saying its private backers were not prepared to fund all the investment needed.
The European Payments Initiative (EPI) was launched last year and is seeking to get more banks and other players in payments on board by December to finalise plans to start rolling out its instant and card payments network.
“Public funding would be nice,” EPI Chief Executive Martina Weimert told an event held by the European Payments Institutions Federation. “Let’s not hide it – it’s going to be a massive investment. It’s expensive.”
The Instant Payments initiative has been deemed a success to date, and its outlook is bright. Its value is estimated to rise to $18 trillion by 2025, up from $3 trillion in 2020.
But to truly forge this “European identity” for payments, the ECB has been calling on the support of major European banks to create a unified payments scheme relying on Instant Payments and other such initiatives.
Martina Weimert, a former partner at financial consulting firm Oliver Wyman who has been appointed chief executive officer of the Brussels-based corporation in charge of implementing the project, says that the EPI will start with P2P payments, since those don’t require the EPI to have a large merchant network in place, or have dedicated physical payments terminals.
Those features will come later, she says. She told the Financial Times earlier this year that the EPI will cost “several billion euros” to get up and running. Private estimates range as high as €6 billion.
Retailers say they are not ready to pay for it, while banks and other EPI shareholders “can carry only so much”, Weimert said, without giving details on the investment needed.
Deutsche Bank, UniCredit, BNP Paribas, ING, Société Générale and Sabadell are among the 22 banks from seven EU countries, including France, Germany and Spain who are backing the venture.
The European Union has been keen to achieve strategic autonomy in financial services, such as by cutting reliance on US Mastercard and Visa for cross-border card payments. It’s unclear whether that will extend to financial backing for EPI.
Weimert said EPI was now in a “critical phase” of decision making over the next few weeks.
It will build a new system and largely replace a plethora of national systems to reduce fragmentation and overlaps in payments, she said, aiming to launch in 2022 P2P transactions based on instant payments, followed by e-commerce.
“It is a major shift so it will take time. Anybody who tells you it’s an easy call and let’s do it quick and dirty, well it’s not really looking to transform the European ecosystem,” she concludes.
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