Hello Andréa! Tell us a bit about your journey in the payments industry. What captivates you the most about payments?
As Director of Studies, Prospective and Training of Partelya Consulting, I work in strategic intelligence in the payments ecosystem. My job consists of several tasks: producing various analysis (e.g., white papers, reports) on the evolution of payments and finance, organizing events (e.g., conferences, webinars, training sessions) to foster knowledge about the main issues of our market, and, last but not least, participating in events at a European and international level to share some insights about the main regulatory, strategic and technological issues of this market.
In addition to these tasks, I am also the Country Ambassador of European Women Payments Network (EWPN) in France and France Representative of two national fintech associations: Aefi Spain and Afip Portugal. This allows me to participate in many projects at a European level.
The most interesting part of my work is collaborating with various European countries and sharing information across a truly international network.
What do you think about the current payment landscape in Europe and how do you see it evolve in the coming years?
The European payments market is living, today, a real period of evolution.
First of all, we can mention the regulatory framework, made increasingly richer, with not only PSD2 but also GDPR and the evolution of AML legislation, which has a strong impact in the field of security. We cannot forget the European Commission’s ambition in creating EU legislation for crypto-assets and artificial intelligence, two critical points for the future of the payments ecosystem.
Then, another remarkable evolution relates to innovation and technologies: banks and new actors show more and more creativity, with, for instance, some interesting experimentations in fields like biometrics or mobile wallets. This trend is also supported by the evolution of digital usage, mainly due to the Covid-19 pandemic. This crisis created a natural new step in digital payments, as we can notice with the development of contactless and mobile payments in Europe. The examples of France with the significant acceleration in the use of contactless cards, and Portugal, with a sharp growth of online payments through MBWay, the mobile wallet developed by SIBS, testify to this reality.
Finally, another huge evolution in the European payments market is linked with the institutional and operational goal of sovereignty. In a more and more global market, with a growing competition of international actors, like internet giants, and neobanks, European actors show more and more interest in creating an effective European model in the field of payments.
This situation is illustrated, for instance, by the works developed in the field of instant payment since 2016, and also, more recently, by the creation of EPI (European Payments Initiative) in 2020 which aims to generate a pan-European framework covering cards, digital payments or even P2P. This reality allows me to predict that European sovereignty will be one of the major topics of our ecosystem in the coming years.
We will also observe some interesting works about open banking and request-to-pay, two significant evolutions of the European payments market.
You mentioned the European Payments Initiatives (EPI). Can you describe what the initiative consists of and what led to its creation?
Announced in July of 2020, the European Payments Initiative (EPI) aims at creating a pan-European payments solution. Launched, at the beginning, by sixteen banks from five European countries (France, Belgium, the Netherlands, Spain, and Germany), EPI is now building its strategy in relation with operational actors of the European payments ecosystem. More precisely, EPI is a scheme and a pan-European payments solution with a rather broad scope aiming to propose a solution for all major retail use cases under one strong brand in Europe. The scope integrates physical and digital cards, and end-to-end SCT Inst [SEPA Instant Credit Transfers]. The idea is to cover Point-of-Sale, e-commerce, mobile commerce, cash withdrawal, and P2P [peer-to-peer]. In addition, EPI also studies the integration of value-added services, such as digital ID or instant financing.
The creation of EPI relates to the history of a Europe of Payments. After the Euro and the SEPA migration, several European payments actors identified the necessity to create a European brand since the card’s framework, in Europe, is confronted with the existence of national brands like Multibanco in Portugal or Cartes Bancaires in France, and international ones like Visa and Mastercard, but no European proposal. Confronted with this situation, some professionals worked on a project for the creation of an EU card scheme, ‘Projet Monnet’, but it did not succeed. The launch of instant payment appeared like an answer, but the necessity now is to accelerate in this field and create a real pan-European framework. Hence the EPI project.
What do you think will be the impact of EPI on merchants, consumers, and financial institutions in Europe? Who will benefit the most from it?
According to the EPI interim company created to manage the project, EPI has six key benefits for European retail payments:
- Efficiency and harmonization;
- Innovation;
- Bringing instant payment to live at a large scale in retail payments;
- A payment alternative for consumers and merchants;
- European sovereignty ;
- Open governance.
EPI aims to bring a European alternative to the proposal of international giants. The opportunities for retailers and consumers are the business models—that will have to be more attractive than the existing ones— and the commodity and security linked with a regional approach.
For financial institutions, EPI represents an asset to compete with international actors and show more creativity in the field of innovation in payments. EPI represents, as a result, a real asset to foster the Europe of Payments at an international level.
What is your perspective on the implementation of this new payment scheme? What do you think will make it successful?
After the launch in July of 2020, EPI extended its position to Poland and Finland. The interim company now has 22 shareholders (33 entities). Among the new stakeholders are Worldline, Nets Group, Spanish Banking Consortium, PKO Polski, and Banco Sabadell. The critical questions at this stage are the following: the technological infrastructure, the business models, the evolution of governance, and also the information actions to build to integrate European consumers in this evolution. In fact, according to my analysis, the success of EPI depends on three aspects:
- The integration of all stakeholders of the market. European banks launched EPI, but to make it successful, it is necessary to integrate into the project other actors like retailers, corporates, and fintechs.
- The capacity to extend EPI to several European countries. EPI has been launched by five European countries. Other markets are studying the project. But to create a European scheme, it is necessary to have a real EU strategy.
- Information and communication towards end-users. One of the main conditions of the success of EPI is the adoption of the solution by consumers. Hence the necessity to integrate the European consumer in this enormous project.
The project investigation for the design and distribution of the Digital Euro was just recently launched, but the European Central Bank already announced that this new currency won’t be introduced before 2026. How would a Digital Euro compare with crypto-assets and stablecoins?
Digital Euro is seen as a fast, easy, and secure instrument supporting the digitalization of the European economy and encouraging innovation in retail payments. It is one of the main questions addressed today by the European Central Bank (ECB).
This project is very different from stablecoins. It is a project managed by regulators. According to the report about the Digital Euro presented by the ECB in October of 2020, this innovation would combine the efficiency of a digital payment instrument with the safety of central bank money.
Thus, it would help deal with situations in which people no longer prefer cash, and would avoid dependence on digital means of payments issued and controlled from outside the euro area. In other words: Central Bank Digital Currency (CBDC) appears in Europe as an innovation in the crossroads of technological innovation, financial stability, and monetary sovereignty.
What is the added value of the Digital Euro compared with other primary payment methods in Europe like SEPA and debit and credit cards?
Digital Euro is not seen, by the ECB, as a way to accelerate the decline of cash or to compete with other means of payment but as a complementary tool answering evolution of uses and financial stability concerns. ECB aims at continuing the emission of cash and the distribution of Digital Euro may be addressed by commercial banks.
Thus, it is necessary to keep in mind that debates and works about CBDC started in Europe a few years ago. The main positions of French regulator Banque de France were publicly presented in 2018, for instance.
Nevertheless, the COVID-19 crisis represented a booster for CBDC debate in Europe. In the spring of 2020, for example, many European countries reinforced their strategy about this issue. The Bank of England opened a public consultation about CBDC and the Netherlands called for a political debate in this field, not only at a national level but also at a European level. Through their national association ABI (Associazione Bancaria Italiana), Italian banks attested that they are ready to work on this technology, following their experimentation with blockchain, considered by many professionals as the technological framework of CBDC.
At a European level, in addition to a report published in 2020, ECB launched a public consultation from October of 2020 to January of 2021 that was a success, according to this organization, with more than 8.000 answers from European citizens and professional organizations and associations. Among the key insights of this public consultation appears the protection of privacy as a primary issue, such as security and pan-European level, confirming that CBDC represents a substantial part of the evolution of European payments infrastructure.
What do you think will be the main use cases for the Digital Euro and the benefits and risks of using it as means of value exchange?
An ECB report published in October of 2020 brings some ideas about the different scenarios related to the issuance of a digital euro.
The first one is linked with the digitalization and independence of the European economy by reducing costs and reinforcing new business models. ‘A digital euro could be issued to facilitate the development by supervised intermediaries of a full range of pan-European end-user solutions accessible to consumers’, attests the report.
The second one concerns the role of cash as a payment method which is declining significantly. According to the ECB report, ‘a decline in the use of cash in the economy would imply increasing dependence on private forms of money and private payment solutions in the euro area. Beyond a certain point, such a trend could endanger the sustainability of the cash infrastructure and hamper the provision of adequate cash services. European citizens would thus encounter difficulties in accessing the only means of payment that is provided by the public sector and that takes account of their needs, regardless of any commercial perspective. In response to a decline in the use of cash, the Eurosystem could introduce a digital euro as an additional form of public money and means of payment’.
The third scenario concerns a form of money other than euro-denominated, like global stablecoins. The fourth scenario is purely linked with monetary concerns: ‘if the Eurosystem were to conclude in the future that the issuance of a digital euro is necessary or beneficial from a monetary policy perspective’. The last scenario concerns the need to mitigate the probability that a cyber incident, natural disaster, pandemic, or other extreme events could hinder the provision of payment services. In addition to these considerations, the ECB also examines some scenarios linked with the broader objectives in relation to the international role of the euro.
While these initiatives seem to bring seamless payments within European countries, the increasing globalization of payments can bring other challenges. Cross-border transactions should still meet the standards for the different countries outside Europe. Are we seeing improvements in that sense? In which ways are European countries preparing for more globalization in payments?
Crossborder is one of the main strategies of the Europe of Payments. In this field, some countries already show an international approach fostering global strategies.
One example is Portugal, interested in the Europe of Payments but also in other regions like Brazil or Africa. Two examples: the recent announcement of SIBS in the African country of São Tomé and the creation, in 2016, of the Ibero-America Fintech Alliance linking Spain, Portugal, and Latin America in the field of fintech.
Other countries have a more European approach like Benelux or France, where creating absolute European independence in payments is one of the pillars of the national retail payments strategy. Hence the difficulty in creating globalization in payments. In addition to this reality, it is important to mention that we observe, in Europe, some national strategies in key evolutions of the market like instant payments or even open banking. Despite this reality, some European companies are already acting at a global level like Tink, recently acquired by Visa. This situation shows that, maybe, the globalization in payments is more linked with the operational strategies led by actors than the institutional ones.