They put pause to the new European payment system

Some European banks are putting off their decision to go ahead with a new payments project that claims to be a local rival to Mastercard and Visa, the company overseeing the initiative said on Thursday.

The delay is a major stumbling block in the so-called European Payments Initiative (EPI), which aims to become a new standard means of payment in the region, offering a card for consumers and retailers across Europe.

Most of the participants from Belgium, Germany and France want to go ahead with the project, EPI Interim Company said in a statement on its website.

“Other participants, such as some Spanish banks, will give their answer in January,” said EPI, so the final list of participating banks will be announced at the end of the first month of 2022.

Among those who have decided to postpone their decision are German banks Commerzbank and DZ Bank, people with knowledge of the matter told Reuters.

The two banks are planning to exit the project over concerns about the relatively high cost of equity participation for German banks, the sources consulted said.

German Unicredit units also do not plan to continue participating in the project, but will examine any future proposals, a spokesman said.

Last month, the project requested public investment, claiming that private backers are unwilling to put up all the money needed.

Launch delay

The European Payments Initiative was launched in July 2020 and became an interim company in December with 22 banks as shareholders, including Deutsche Bank, BNP Paribas, ING, Société Générale and Sabadell.

“We can offer options to consumers, but also to merchants in the future,” said Martina Weimert, EPI CEO, at an online event in February this year.

According to the company, European consumers have traditionally preferred to use cash, but adoption of digital and contactless payments grew due to the coronavirus pandemic.

The banks had agreed that December would be the deadline to commit to implementing the new network for physical payment cards and a digital counterpart over the next three years. They expected it to be up and running in 2022, but it will apparently take longer.

“(The initiative) aims to strengthen Europe, make it more independent and robust,” Thierry Laborde, deputy director of operations at French bank BNP Paribas, told Reuters in 2020.

“We will do it collectively, pooling our resources. As for the distribution systems, prices will vary from bank to bank, but the infrastructure will be pan-European, “he added.

They seek independence

The ECB said that relying on non-European companies to execute two-thirds of electronic transactions creates a risk for the regional payments market, according to Reuters.

“The European Payments Initiative aims to become a new standard means of payment, offering a card for consumers and retailers throughout Europe,” according to a statement signed by 16 banks.

This is not the first time that any entity has sought to operate independently of Visa or Mastercard. In November, Amazon announced that it will stop accepting Visa credit cards issued in the United Kingdom as of January 19. The company said the move is due to “high fees Visa charges for processing credit card transactions.”

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