Tech News: European banks join hands to take on US dominance in online payments.
Some of Europe’s largest banks and credit card processors are joining forces in an effort to create a payments giant that can tackle a market currently dominated by the U.S. The plan, set up by a Brussels-based company, is to develop a series of proposals in September to offer a facility for online and in-store payments, along with other options for paying bills and withdrawing money from ATM.
Banks that have so far joined the partnership with the European Payment Initiative (EPI) include Deutsche Bank, BNP Paribas, ING, UniCredit and Santander, which already process more than half of all payments in Europe. The incentive also received the support of the European Union, together with the financial regulators of the euro zone.
So far the project has also raised solid funding, with € 30 million from credit institutions for EPI. “The idea is to create a European payment champion that can compete with PayPal, Mastercard, Visa, Google and Apple”Said Joachim Schmalzl, president of the EPI.
Reinforcing the program is the fact that Schmalzl sits on the board of the German Savings Banks Association and is a staunch supporter of the project. However, the initiative has yet to be officially branded.
Currently, the goal is to have the applications ready and in practice early next year. The goal is to develop a system for real-time payments between consumers, followed by an expanded payment tool by the second half of 2022.
If successful, the new payment processing facility could give the EU more autonomy, especially as card payments are currently mainly processed by US-based companies. To emphasize the dominance of US companies in payment processing, four out of five transactions in Europe are processed by Mastercard and Visa, according to the EuroCommerce lobby group.
The move is in response to what the alliance believes is a market dominance that is detrimental to both consumers and merchants, with relatively high fees contributing to what Schmalzl calls an “oligopoly.” The new payment structure could offer both merchants and consumers more choice, he says.
However, there have been other attempts to break the US dominance in payment processing. For example, the Monnet project was launched in 2011, which received support from 24 European credit institutions, but ultimately failed to establish a viable business model.