# Back to the Future: 5 Big Questions EPI Must Answer Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-03-15 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: European Payments Initiative (EPI) 2020: What You Need to Know Meta Description: Learn about the aims of EPI to create a unified payment solution for consumers and merchants across Europe. Discover how EPI could revolutionize the European URL: https://financedigest.com/back-to-the-future-5-big-questions-epi-must-answerhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/back-to-the-future-1736838525883-compressed.jpg) _By **Michel Vaja,** Payments Consulting Services Lead, Icon Solutions_ In July 2020, a group of sixteen major European banks from five Euro countries announced the launch of the European Payments Initiative (EPI) with the aim to create a unified payment solution for consumers and merchants across Europe. EPI’s stated long-term ambition is to become a new standard means of payment for all transaction types. This includes in-store, online, cash withdrawal and person to person (P2P), and as an alternative to existing international payment scheme solutions. It is fair to [say that EPI has been met](https://www.financedigest.com/winter-weather-could-be-mild-german-met-office-dwd-says.html "Winter weather could be mild, German met office DWD says") with a degree of pessimism, given the scale of the project and Europe’s history of similar, failed initiatives. But the benefits that EPI can [potentially deliver](https://www.financedigest.com/delivering-on-the-potential-of-open-finance.html "Delivering on the potential of open finance") means this time round really could be different, although fundamental questions remain. ### **What makes EPI different?** The main difference between EPI and previous attempts such as Monnet is that, for several reasons, political and [industry support](https://www.financedigest.com/how-fintechs-are-supporting-the-hospitality-industry.html "How fintechs are supporting the hospitality industry") is far greater this time around. Firstly, EPI makes increasing sense from a global competition standpoint. The major cross-border [retail payments](https://www.financedigest.com/why-payment-technology-will-be-the-backbone-of-the-uks-retail-recovery.html "Why payment technology will be the backbone of the UK’s retail recovery") infrastructures used by European consumers are US-owned, which has caught the eye of European regulators. And as banks’ interaction with their customers is gradually eroding due to PSD2 and new players entering the [payments ecosystem](https://www.financedigest.com/the-future-of-payments-biometrics-within-the-financial-ecosystem.html "The Future of Payments: Biometrics Within the Financial Ecosystem"), EPI provides an opportunity to reclaim lost ground. In addition, the European payments [market remains](https://www.financedigest.com/tissue-tapes-market-remains-afloat-amid-covid-19-pandemic-to-surge-positively-projects-fmi-2019-2029.html "Tissue Tapes Market Remains Afloat amid COVID-19 Pandemic, to Surge Positively, Projects FMI 2019 – 2029") hugely fragmented (despite major efforts from the industry in realising SEPA). The dominance of the US card networks reflects the historical focus of European payment [innovation towards](https://www.financedigest.com/the-dural-graft-market-to-show-an-inclination-towards-digitized-innovation.html "The Dural Graft Market to show an inclination towards digitized innovation") national or regional solutions. But in today’s globalised world, these solutions have too few economies of scale to compete successfully with the US networks and [keep up with market innovation](https://www.financedigest.com/innovation-based-stability-to-keep-the-hip-resurfacing-implants-market-going.html "Innovation-Based Stability To Keep The Hip Resurfacing Implants Market Going"). As Europe remains a very cash-heavy economy, EPI represents an opportunity to convert a [large portion of these cash transactions and realise a good degree of scale](https://www.financedigest.com/facebook-parent-meta-is-preparing-large-scale-layoffs-this-week-wsj.html "Facebook parent Meta is preparing large-scale layoffs this week – WSJ"). ## **5 big questions that EPI must answer** Despite the potential promise of EPI, more information is urgently required. Here are five key questions that need to be addressed: 1. ### **_What is the Target Operating Model?_** The European payments industry is still in the process of [delivering Open Banking](https://www.financedigest.com/isnt-it-time-open-banking-delivered-for-businesses.html "Isn’t It Time Open Banking Delivered for Businesses?") and PSD2. It has also seen unprecedented adoption of [digital payments](https://www.financedigest.com/digital-payment-tools-the-new-normal-for-charity-fundraising.html "Digital payment tools: the new normal for charity fundraising?") due to Covid-19. Within this context, much more clarity is [needed on what EPI aims to achieve in the long run](https://www.financedigest.com/time-has-run-out-3ds2-is-here-and-retailers-need-to-be-on-board.html "Time has run out – 3DS2 is here and retailers need to be on board "). For example, will EPI support both in-store and [online payments](https://www.financedigest.com/online-payment-gateway-market-to-witness-a-cagr-of-10-3.html "Online Payment Gateway Market to witness a CAGR of 10.3%")? Will it [enable Open Banking](https://www.financedigest.com/the-open-banking-revolution-enabling-accessible-and-inclusive-finance.html "The open banking revolution – enabling accessible and inclusive finance") based payment initiation? Where does request to pay fit into the roadmap? A clear blueprint is required so that [industry stakeholders can prepare and assess](https://www.financedigest.com/automotive-mats-market-industry-analysis-opportunity-assessment-and-forecast-up-to-2031.html "Automotive Mats Market: Industry Analysis, Opportunity Assessment and Forecast up to 2031") the viability of offering EPI functionality. 2. ### **_How will EPI meet pan-European payment requirements?_** ![Michel Vaja](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/image001-450x582-1736838526165-compressed.png) Michel Vaja There are some [fundamental cultural differences that will need to be addressed for EPI to work](https://www.financedigest.com/smart-working-versus-presenteeism-enabling-productivity-in-a-post-pandemic-hybrid-work-culture.html "Smart Working Versus Presenteeism: Enabling Productivity in a Post-Pandemic Hybrid Work Culture") on a pan-European level. [Consider that French consumers cannot imagine making a payment without the option](https://www.financedigest.com/cryptoverse-is-bitcoin-out-of-the-woods-consider-the-options.html "Cryptoverse: Is bitcoin out of the woods? Consider the options") of a chargeback. But for the Dutch, it has been normal for years to conduct e-commerce transactions without chargebacks. As these different [payment trends](https://www.financedigest.com/top-5-payment-trends-for-2016.html "TOP 5 PAYMENT TRENDS FOR 2016") and preferences are reflected across all European territories, EPI must develop a plan to update scheme rules and procedures as banks from new markets come on stream to meet specific requirements, while ensuring wider interoperability. 3. ### **_How will EPI interoperate (or not)?_** Many [European banks](https://www.financedigest.com/european-banks-cash-in-on-rising-rates-as-clouds-gather.html "European banks cash in on rising rates as clouds gather") will continue to rely on the US card networks after the launch of EPI. Yet it is not clear whether EPI plans to [partner with the networks](https://www.financedigest.com/italys-cdp-and-partners-ask-tim-for-more-time-for-network-deal.html "Italy’s CDP and partners ask TIM for more time for network deal"). Additionally, whether EPI intends to [offer card](https://www.financedigest.com/fingerprints-and-tag-systems-collaborate-to-offer-contactless-biometric-payment-cards-globally.html "Fingerprints™ and Tag Systems collaborate to offer contactless biometric payment cards globally") usage internationally must be clarified. Due to the political and sovereignty foundations of EPI, if EPI has its own brand identity, it will also be interesting to see whether EPI plans to scale digital services within US-based wallets such as Apple Pay and [Google Pay and allow digital cards to be integrated](https://www.financedigest.com/impact-com-closes-2021-with-new-google-pay-integration-150m-in-funding-and-51-increase-in-clients-yoy.html "impact.com closes 2021 with new Google Pay integration, 0M in funding and 51% increase in clients YoY"). 4. ### **_How does EPI plan to incentivise migration?_** A [payments system](https://www.financedigest.com/covid-19-putting-a-spotlight-on-mea-payment-systems.html "COVID-19: Putting a spotlight on MEA payment systems") is only beneficial if there is a critical mass of users. If EPI is not mandated, there must be a plan to incentivise the likes of Cartes Bancaires, iDeal and other prominent, popular local networks to migrate to EPI. This means that for EPI to work, there may need to be sacrifices that will be hard to swallow. Alternatively, the intention may be for EPI to [become another layer of technical infrastructure](https://www.financedigest.com/are-banks-destined-to-merely-become-infrastructure-providers-in-the-banking-industry-of-the-future.html "Are banks destined to merely become infrastructure providers in the banking industry of the future?"). 5. ### **_Does digital currency feature on the EPI roadmap?_** With a blank slate comes the [opportunity to ensure a futureproof system](https://www.financedigest.com/airway-clearance-devices-system-market-industry-analysis-opportunities-technology-demand-top-players-and-growth-forecast-2027.html "Airway Clearance Devices System Market Industry Analysis, Opportunities, Technology, Demand, Top Players and Growth Forecast 2027"). However, this presents its own challenges. EPI must consider where [digital currencies feature in the future landscape of the network and start taking steps to address the impact of ‘known innovations’ such as the digital Euro](https://www.financedigest.com/taming-the-new-wild-west-how-biometrics-can-help-the-ecb-deliver-a-secure-digital-euro.html "Taming the ‘new wild west’: how biometrics can help the ECB deliver a secure digital euro"). ## **The future of European payments: Bigger thinking required** In summary, EPI could potentially provide a bedrock for [future European payments innovation](https://www.financedigest.com/the-role-of-fintech-in-shaping-innovative-future.html "The Role of Fintech in Shaping Innovative Future"). But rather than being too ambitious, it arguably does not go far enough. Although public information is limited, it seems EPI will focus largely on existing payment types (e.g. cards and wallets), and has few ambitions with regard to major, innovative improvements for [European consumers](https://www.financedigest.com/european-airlines-see-travel-withstanding-consumer-squeeze-for-now.html "European airlines see travel withstanding consumer squeeze for now") and merchants. EPI should aim for loftier heights rather than merely [creating a European](https://www.financedigest.com/european-privacy-watchdog-creates-chatgpt-task-force.html "European privacy watchdog creates ChatGPT task force") card network or wallet proposition. A comprehensive [industry engagement plan](https://www.financedigest.com/plan-to-improve-german-rail-transport-may-worsen-congestion-industry-warns.html "Plan to improve German rail transport may worsen congestion, industry warns"), including how the supply-side of the market, merchants, and consumer groups can participate, would be greatly received. This would help create a truly forward-looking platform for European payments, fit for the [next 50+ years](https://www.financedigest.com/uaes-adnoc-to-open-swiss-trading-office-next-year.html "UAE’s ADNOC to open Swiss trading office next year"). --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---