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EU banks started to work on a new payments system within Europe which will be ready and fully operative by 2022. 16 banks including Germany, France and Spain have announced that the new system (European Payment Initiative) will be European only. European Central bank has already supported banks initiative.
Though it has been made a significant progress towards an integrated European payments market with the new of pan-European infrastructures under the Single Euro Payments Area (SEPA), Europe still need a unified system. European banks were searching for a long time for a system that would take on its rival Visa and MasterCard, as having third party outside of Europe is not the safest alternative and secondly having such a provider doesn’t help to support a euro and EU single market. It is expected to cover all types of transactions including in-store, online, cash withdrawal and 'peer-to-peer'.
As it is based on the SEPA instant credit transfer (SCT Inst) operation, it can immediately capitalise on big infrastructures, such as the Eurosystem’s TARGET Instant Payment Settlement (TIPS).
This the European Payments Initiative will erase the fragmentation in European retail payments and should encompass all euro area countries. Currently more than 50% of retail payment transactions in Europe are still done by cash. The EPI system will bring huge benefits to European merchants, by offering them a seamless, competitive and unified payment solution. Even digital payment solutions are fragmented in Europe and European citizens are still unable to pay digitally everywhere making it a big weakness for European financial system.
Thierry Laborde, deputy chief operating officer of French bank BNP Paribas (BNPP.PA) has commented on new unified payment solution for consumers and merchants across Europe "It is aimed at strengthening Europe, at making it more independent and robust"
Who will participate in the European Payment initiative?
European banks such as BBVA (BBVA.MC), BNP Paribas (BNPP.PA), Commerzbank (CBKG.DE), Deutsche Bank (DBKGn.DE), Santander (SAN.MC), ING (INGA.AS), UniCredit (CRDI.MI) and Societe Generale (SOGN.PA) have already registered in the program.
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