Can the instant transfer replace the bank card? Funny period to ask the question, and yet. At a time when payment fintechs peer-to-peer and payment in installments collapse, there is a European initiative that is being launched. EPI Company, the company born of a consortium of fifteen European banking players, of which your bank is certainly part, will launch its payment solution and attempt to chasing the Visa and Mastercard duopolyput an end to the use of the bank card, and restore Europe’s sovereignty in payment.
This makes three years that the project develops. If we talk about it so much today, it is because it is in the process of becoming a reality. By the end of the year, France and Germany will host a first pilot phase for the deployment of the EPI Company solution in payment by instant transfer. The opportunity to return to the subject which is likely to cause ink to flow in the coming months and years. The ambition is particularly great, and would bring the project to invite itself into all conversations.
1) EPI Company, a size company
In three years of development, the project has had its ups and downs. Initially, around twenty players were planning to participate, but given the level of development and the amounts of investment to be made, several have deflated. Today, while EPI Compagny sees the end of the tunnel, they are already four to have ended up joining the initial shareholders. Among them, BFCM, BNP Paribas, BPCE, Agricultural creditDeutsche Bank, GDPR, ING, KBC, The postal bank, Societe Generale, Nexi and Worldline. In all, more than one billion euros of investment have been injected.
© EPI Company
More than a consortium, the company has taken off and is already agreeing to a policy of external growth, made up of takeovers. The instant transfer tool he is designing is based on a model already popularized in the Netherlands, and EPI Company has chosen to buy the local interbank solution Currence iDEAL. Same thing in Luxembourg, with the acquisition of payment solutions provider Payconiq International. In a recent Press releasethe European company nevertheless pointed out that the competent competition authorities still had to approve the two transactions.
In addition to about fifteen players, of which your bank is certainly one, we find Worldline, which is none other than the French multinational which had become the leader in global payment terminal solutions with its acquisition of Ingenico. Since February 2022, its capital has been held by an American investment fund, but its strike force is still immense with a market share of 40% estimated in 2019 at points of sale, with more than 330 million devices in circulation. and 550,000 customers.
2) “An alternative to the bank card”
The deployment schedule for the new EPI Company services is as follows: first, there will be a peer-to-peer payment service, in other words from one individual to another individual (like PayLib or Lydia). Then the offer will be extended to payments from individuals to professionals, such as to pay a craftsman, a babysitter, etc. Third step: approach the points of sale and be able to pay at payment terminals such as those of Worldline, in shops, bars and restaurants for example.
© Unsplash / Jonas Leupe
Finally, to strengthen the attractiveness of the European alternative to Visa and Mastercard, EPI Company also wants to develop payment in installments, deferred payment, or the refund of returned item. The project must also be international, with the most European countries covered, to have the possibility of paying in France and abroad without worrying about your banking plan and having the right traveler’s bank card.
“We have worked hard to offer commerce a real alternative to bank cards. We propose to adapt instant payment, which was first designed to work from bank account to bank account, to make it commercially usable in a large number of situations”explained in an interview with our colleagues from the Tribune EPI Company Managing Director Martina Weimert.
3) Breaking the Visa-Mastercard duopoly
Difficult to measure the weight of Visa and Mastercard. But it is certain that their duopoly is still very present in Europe. For all the merchants put together, this ultimately represents astronomical sums of interchange fees paid to two American card issuers, and a stranglehold that is never a good sign. The two payment giants may have suffered from the arrival of new payment startups such as large groups like Apple and Google, but they remain a difficult target in Europe.
© Lemon squeezer
At its genesis, the EPI company wanted to break the duopoly by launching its own bank card. In the end, this was not possible due to the departure of various players, particularly in Spain, but the solution of a total alternative to the bank card is perhaps the best decision in the end. In particular because the project will be able to define its own interchange fees or even eliminate them completely, to encourage businesses to turn to it and see great interest in it.
On the business model issue, everything is still very vague and it is still difficult to know how EPI will earn money if its policy is to lower costs as much as possible, whether for individuals, professionals or partner banks. Speaking on the subject, Managing Director Martina Weimert said: “The payment market is very competitive and we will have to be very competitive too. We are well aware that we are a low-margin, high-volume business model, whose profitability is only considered in the long term and by the value provided”.
4) Make or break
A “low margin and high volumes”, therefore implies massive adoption. Like the neo-banks which launched before 2020 with the aim of offering only a free offer and capitalizing on remuneration through the use of bank cards (interchange fees, we come back to this), it will be necessary to target millions of customers. The banks that financed the project will already want to be able to have a return on investment, and find a competitive interest in it for their customers or future customers. Then two hypotheses present themselves: failure or success. And surely no middle ground.
If the project fails, then we will end up with a Paylib bis. The French instant transfer service between individuals and mobile payment financed by many French banks was never adopted as it should have been, so much so that it had to be left aside in its development.
If the project succeeds, then we will find ourselves in the same situation as India or Brazil, where the success of an instant transfer payment solution is already there. Both countries adopted equivalent systems, in 2016 and 2020 respectively. Europe can count on an 80% share of citizens equipped with a smartphone, but with a much higher banking rate than that of India and Brazil, which offered them the opportunity to launch a more accessible, giving many people the possibility of equipping themselves with a banking solution without going through the traditional model that is less accessible.
