“Almost 20 years after the euro integration, it is now time to unite, in a common effort, so as to present a fully European solution for numerical payments to consumers and storekeepers, which is perfectly adapted to the 21st century needs of commerce.” It is what Gilles Grapinet, the Worldline’s CEO, first no-banking buyer of EPI, thinks about the European both financial and digital project.
Throughout this enthusiasm, the prospect of EPI seems threatened on many fields. Economy often has to deal with politics in order to work.
What is the European Payments Initiative (EPI)?
In 2020, 16 banks from 5 European countries (France, Belgium, Germany, Netherlands, and Spain) decided to join their forces to create a pan European solution for digital payments. This idea is currently consecrated in the EPI plan, whose headquarter is established at Brussels. This project, which should be launched by 2022, concerns the credit and debit payments, the peer-to-peer payments (p2p) and a digital wallet. EPI ought to become the new standard regarding payments on the European land, for consumers and storekeepers.
The leaders of this common project try to work with no-banking buyers (one maybe remembers the one mentioned in the introduction: Worldline). One thing is crisp, the politics of EPI interim company is based on the Union’s economic sovereignty, but it does not mean they are reluctant to work with a European no-banking enterprise. Indeed, everyone may benefit from this coalition. For instance, Worldline creates and uses digital services on payments and transactions.
Currently, the EPI plan is not launched on the financial market yet. But both European commission and European central bank (ECB) already support it. Being held by these European institutions is a strong asset for EPI. Moreover, it is likely to be a leverage for the Single Euro Payments Area (SEPA), the economic place which “harmonizes the way cashless euro payments are made across Europe” according to the European Commission. The SEPA is already a common system, applied in every state of the Union and based on two legal frameworks: the “payment service directive” (2007/04/EC) and the “SEPA regulation” (260/2012).
Why did this common project start?
One should remind of the essence of the Union: the economic integration. Five phases were crucial in the construction of the European Union (to read from the bottom to the top):
5. The economic and monetary union (economic union & a single money)
4. The economic union (common market & common politics)
3. The common market (customs union & free movement of people and of goods)
2. The customs union (free trade area & customs duties)
1. The free trade area (no more customs limits between members of the Union)
So, one is now capable of understanding the European Union’s economic politics tends towards standardization. For instance, this philosophy led to the creation of the Common Agricultural Policy (CAP) in 1957, which is applicable since 1962.
Yet why is SEPA not enough for the Union? Currently, more than 90% of the credit and debit cards are edited by American enterprises. The Visa card is now the leader on the market, the Mastercard is in second position and finally the American Express is the third most used one. In France for example, Visa edits 43,5 million of cards on the 70 million owned by French people. From that assessment, one can see a double problem: the American influence on the European digital transactions (even more so on the economy) and the lack of European economic sovereignty.
The first issue may be illustrated by Crimea’s crisis in 2015. The American companies (Mastercard and Visa) decided to forbid the use of their cards on the land of Crimea (because of political tensions). This restriction affected the economy of the entire country, forcing it to find a solution quickly. Though the Government found a way to overcome the situation, the crisis became also economic.
The second problem is fittingly represented by the commissions taken by the North American enterprises. Europe finances the American hegemony because of the 1% to 2% (depends on the card people have) of commission imposed to the business transactions.
500 million, it is the number of people EPI may concern. During the Covid-19 crisis, the dependence of the Union has been felt by every member state. The most important European Union’s reason of being is its economic integration, it is why the Union is now doing a dogged work with EPI.
What are the difficulties EPI is likely to face?
It is due to this unbalanced situation the necessity of a European network of digital transactions has been consecrated in the EPI project. But though the idea seems laudable, many difficulties will have to be overcome by leaders of this project.
On the economic and financial fields, EPI is expansive. Around 10 billion of euros would be invested in it, which is substantial money during a crisis context. Moreover, the GAFAM are still spreading their influence on the continent, by commercials or lobbying.
On the technical field, EPI may be slowed by the European right. One can remind of the Monnet project, aborted a few years ago. As EPI, it was about creating a common transactions system, but jurisdictional disagreements forced the project to shut down.
Finally, on the cooperation field, EPI will have to face the necessity of pleasing every economic operator. If the institution and banks seem already convinced, it is not possible to say such a same thing for the states and their citizens.
The European citizenship: a necessary tool to spread EPI on the Old Continent
Due to this last difficulty, we can easily understand that this project will obviously be political. The thing is before being political, European Union is first of all economic. Yet, economic issues have to be led thanks to politics.
It is why European citizenship is bound to be the necessary tool to spread EPI on the Old Continent, but also another difficulty for the economic digital integration.
AUSG – Pôle Presse