European Payments Initiative Guide
What Is the European Payments Initiative?
Get a comprehensive look at this pan-European payments solution for consumers and merchants
What is the European Payments Initiative (EPI)?
EPI is an initiative launched to create a pan-European payments solution, leveraging and addressing the most important use cases for consumers and merchants.
The ambition of EPI is to become the new standard for payments in Europe by creating a unified, innovative, pan-European payments solution leveraging the SEPA Instant Credit Transfer (SCT Inst) and Request to Pay. This will include offering payment instruments to consumers and merchants across Europe, such as payment cards, digital end-to-end real-time payments, peer-to-peer (P2P) payments and a digital wallet. The solution will also serve consumers and merchants across all types of retail transactions including in-store, online, cash withdrawal and P2P, and become an alternative to existing international payment solutions and schemes.
What makes EPI different?
EPI is tailor-made for the European market, considering the different levels of digitalization in European domestic markets. EPI also provides a solution to any European community that does not have a payments infrastructure, card scheme or digital solution with connectivity that does not require a specific investment.
Shareholders and members of the EPI are acquirers, issuers and acceptance providers that will influence the governance with the voice of all participants, including merchants. This governance model will drive the adoption of the new standards and ensure that the services meet the requirements of the market participants.
EPI will use the latest standards and technology. Real-time payments will be at the core of the EPI services, using the SEPA SCT Inst standard and infrastructure. ISO 20022 will also be a differentiator of EPI, enabling richer data exchanges in payment services.
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What is the target operating model?
EPI has planned to create two operating entities: the EPI scheme manager and the EPI central entity. The scheme manager will operate the scheme, including the definition of rules, messaging standards, administration rules, branding and communication. The EPI central entity will provide technical activities, such as directory server and tokenization, and routing for cross-border transactions.
In addition to the central infrastructure built by the EPI central entity, there will be EPI-certified processors that will provide optional services. The combination of a central infrastructure and certified processors will provide market participants with more options to easily access the EPI services.
What are the benefits of EPI?
EPI will harmonize payments in Europe into one standard that will overcome the current challenges of fragmentation. A unified standard for all retail payments will foster innovation, leveraging new services such as real-time payments. In Europe, bringing real-time payments to a large scale will provide benefits to the payments ecosystem, including merchants and consumers. In addition, EPI will bring the benefit of digital payments to a higher level, by providing true pan-European interoperability to the current fragmentation of domestic digital players.
Europe will also benefit from European payment standards with European governance. As a result, Europe will become independent from foreign standards with foreign governance.
How will EPI meet pan-European payment requirements?
EPI is being created from the outset with the goal to meet the requirements of unified payments in Europe. EPI will meet these requirements by creating a seamless cross-border payments experience, with a combination of a new EPI central infrastructure and the domestic payment processors. Meeting these requirements will involve a co-existence of the new EPI standards with the existing domestic payment schemes.
EPI is also being created in compliance with European regulations, such as the second Payment Services Directive (PSD2) and the General Data Protection Regulation (GDPR).
Which payment products will EPI launch?
EPI will launch two payment products: the EPI card and the EPI digital wallet. The EPI card will be both physical and virtual for use in the EPI digital wallet and other wallets. The use cases for the EPI card will be payments at POS terminals, e/mCommerce and ATM cash withdrawals. The EPI digital wallet will offer both card and account-to-account services. The use cases for the EPI digital wallet will include person-to-person payments, e/mCommerce and payments at the POS.
What are the target timelines?
In the first half of 2022, EPI plans to launch the first EPI offerings, based on both the EPI card and the EPI digital wallet. The first set of services will be available at the same time the brand is launched at a European level. These services will be expanded in phases from 2022 until 2024. EPI plans to complete a full deployment of services in 2025.
How does EPI plan to incentivize migration?
The European payments market is fragmented with several domestic solutions. EPI provides an immediate incentive by facilitating cross-border transactions. While some European countries have domestic payment networks for cards, real-time payments or both, there is limited or no interoperability among these networks. In addition, EPI will provide a single brand in Europe that can scale to millions of European consumers. This brand awareness will be an incentive for acquirers, consumer banks and payment processors to migrate to EPI.
Why should acquirers offer EPI?
The launch of the EPI brand will attract millions of European consumers. Acquirers will benefit from this brand awareness and the demand from the consumers for EPI payment services. Acquirers will also benefit from faster access to settled funds and attractive pricing for payment services. In addition, EPI will launch value-added services that will attract consumers and benefit acquirers with high demand and a larger consumer base.
Why should consumer banks offer EPI?
The recent changes in the payments landscape, such as PSD2 and open banking, allowed new players to enter the ecosystem proposing innovative services to consumers. As a consequence, consumer banks are facing risks of disintermediation as well as loss of customers. EPI will promote cooperation between bank members, joining efforts to embrace evolving technologies to offer innovative services to consumers. This will allow consumer banks to retain customers and be perceived as the center of trust, keeping control of the most valuable asset — the customer data.
Does digital currency feature on the EPI roadmap?
No, a digital currency is not on the EPI roadmap at this time. The European Central Bank has communicated that a Euro digital currency is being evaluated. While the EPI has not included a digital currency in their roadmap, their plans to include a digital wallet make EPI a potential infrastructure for the distribution of a digital currency.
Will ACI support the EPI?
Yes, ACI will support the new payment standards. The publication of these standards has not been scheduled yet and is expected ahead of the launch in the first half of 2022. ACI has been supporting payment networks worldwide for more than 45 years and is uniquely positioned to support the new European payment standards. ACI continuously invests in the evolution of its solutions to provide customers with compliance to existing and new payment standards.
How is ACI working to drive the adoption of EPI?
ACI is supporting customers in Europe in the assessment of the requirements to adopt EPI. ACI is contributing with its global experience in advancing the adoption of real-time payments and payment innovations. ACI will be aligned with EPI to drive the successful implementation of the new standards.