As regulators push for the development of instant payments, European Union countries continue to leverage preexisting economic relationships to advance faster payments across the region.
It’s a trend that has led to historic real-time payment growth and adoption in recent years, PYMNTS has reported, with successful national payment schemes like iDEAL in the Netherlands, Sweden’s Swish or BLIK in Poland driving online and point-of-sale payments growth in their respective countries.
But “what is it worth if you are only successful in one market,” Martina Weimert, CEO of the European Payments Initiative (EPI) Company, argued in an interview with PYMNTS, pointing to the lack of a pan-European solution as one that limits payment growth in the region and leaves out countries without a national payment system out of the equation.
That’s where the value of a European digital wallet and instant payment system spearheaded by the EPI Company, made up of major regional banks and acquirers, comes into play.
“We are really attached to this vision of a unified, strong, consistent solution because it makes it so much easier, not just for merchants but for individuals as well,” Weimert told PYMNTS, adding the recent acquisition of Dutch payment scheme Currence iDEAL and Luxembourg-based Payconiq International by EPI is helping to bring that vision of a unified payment system closer to reality.
The goal now is to leverage the purchases — both still pending regulatory approval — to launch a pilot person-to-person (P2P) digital wallet in the Netherlands, Belgium, France and Germany by the end of the year before extending it to additional European countries.
According to Weimert, the four countries have the potential to drive 60% of transactions across Europe, particularly the Netherlands, where 70% of all eCommerce transactions are paid with iDEAL. The Dutch payment processor also clocks more than 1.2 billion transactions annually and boasts a strong merchant acceptance network of over 230,000 merchants operating in the Netherlands and other EU countries, making it a fitting launchpad for a standard European payment solution, she further noted.
The acquisitions will also give way to in-person consumer-to-business payments or what Weimert referred to as P2Pro, meeting an important need for professionals like plumbers, yoga teachers and babysitters who do not have a card terminal.
“This new form of payment allows you to address something which is still underdeveloped or not covered sufficiently and that is [contactless] mCommerce or unattended commerce,” she noted, explaining that it enables consumers to simply scan a QR code and finalize a transaction on their phone without having to go into an app or on a merchant’s website.
Finally, she said unlike the pan-European regional card scheme ambition the EPI once had but has now abandoned, a P2P and P2Pro mCommerce solution “is much more aligned with the development of a true omnichannel” customer experience, starting with QR codes and eventually near field communication (NFC) technology when Apple lifts the restriction in the iPhone.
Interoperability has long been a guiding principle for the European payments ecosystem. It’s a goal different national digital wallets have been looking to achieve with the creation of the European Mobile Payment Systems Association (EMPSA) in 2019 to enable a more frictionless cross-border payment experience for consumers traveling around the continent.
But according to Weimart, the initiative, which currently consists of 16 digital wallet providers, has very little chance of success. “EMPSA wants to take the national payment solutions and make them interoperable. [Very bluntly] we don’t believe that this can work,” she remarked.
In fact, connecting multiple systems is more than just a technical undertaking, she explained but also involves the complex and impossible task — in her view — of merging different rules, business models and use cases that might be covered by one and not the other, not to mention leaving out countries without a functioning national digital wallet solution.
“What do you do with the markets that don’t have a successful national solution? They have nothing,” she argued. “So, you end up with a patchwork of European solutions which are not necessarily doing the same thing. They’re not all in physical commerce, not all in eCommerce or P2P and are not all in shops. You won’t get very far with this [strategy].”
She reiterated that the missing link is a digital wallet co-existing in a unified fashion across borders which can offer European and international merchants operating across EU markets one seamless EPI integration point without the need to connect to different national solutions.
And the fact that iDEAL, the most successful payment solution in Europe, per Weimert, is willing to move into EPI gives the initiative credibility. It paves the way for smaller solutions to take the plunge.
Moreover, iDEAL’s decision is a clear sign that nationalist sentiments are waning in favor of sharing investments to build a strong, unified regional solution, she noted.
As Weimert said, “It’s not a case of I do my thing, you do your thing and then we interconnect. That’s not creating any leverage. That’s not creating any powerful solution. You’re just connecting because you want to survive [while still holding on to your national systems and that won’t work].”
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