The European Payments Initiative has halted its ambitious plans to form a European competitor to Mastercard and Visa.
Abandonment of the plans follows the departure of half of its members, nonetheless, remaining shareholders underlined that they continue to be ’convinced of the strategic value of a unified payment solution ready for commerce leveraging, especially instant payments and want to go ahead’.
After the setback of the numerous departures, the group is likely to focus on expansion into the e-wallet space and move away from potentially building a card network similar to Visa and Mastercard.
Commenting on the news, Dean Wallace, Director, Consumer Payments Modernisation, ACI Worldwide stated: “The plans for the European Payments Initiative are ambitious, so a few obstacles are expected.
“It was always going to be a challenge to create a new card scheme which would operate multi-laterally across European markets, dictated by a scheme of rules in the centre, but operated by multiple interdependent domestic operators.
“Further, the need to update merchant infrastructure across the entire bloc would require a costly and lengthy set up for the industry. And would have been based on the mantra ‘old is best, we just need to Europeanise it’ built upon decades old concepts (plastic cards at point of sale) without visibly improving the experience for merchants or consumers in any notable way.
“While EPI does have plans for a digital wallet and real-time payments, its heavy bias towards cards was unrealistic given today’s evolution to real-time and digital payments.”
Looking at the lessons that can be learned from other markets, he added: “Other markets such as India and Brazil have seen massive success by leaving Cards alone, and instead implementing real-time and digital payments experiences. This has driven immense growth in those markets as consumers and businesses alike have moved to use a vastly simplified, cheaper, and enhanced customer experience using easy to use, distribute and maintain digital wallets that ride the instant payment rails.
“Of course, EPI’s plans are not ruined. By refocusing on where the bang will be worth the buck – digital and real-time payments – execution and subsequent adoption will be stronger.”
Expert Analysis: Although news of the departure of many of its key firms will be a major setback for the EPI, there is undoubtedly still a role for it when it comes to the evolution of the payment space.
To place a focus on digital wallets could be a key step for the group as it seeks to shift its next steps and blueprint for significant growth.