A pioneering project to develop pan-European electronic banking has made minimal inroads in the 18 months since its launch, senior EU officials revealed on Thursday as they urged public authorities to provide much-needed backing and threatened to set an “end-date” to push parties on to the system.
The “single euro payments area” – or Sepa – project was launched in January 2008 and aims to make electronic payments across the eurozone as straightforward as domestic payments, thanks to the adoption of common processing standards and systems.
In principle, consumers should be able to pay utility bills in one country from a bank account in another, for example, and have no problems using their credit or debit cards anywhere in the eurozone.
But by July 2009 only 4.4 per cent of all credit transfers used Sepa standards, and EU officials acknowledged on Thursday that, while the banking industry had drawn up necessary rulebooks, migration to the new standards “is currently lagging”.
Although Sepa is a private sector initiative, developed by European banks, it has been strongly backed by both the European Central Bank and the European Commission which see it as a key step towards weaning Europeans off their heavy use of cash and encouraging financial integration across the region.
Earlier this week Gertrude Tumpel-Gugerell, an ECB executive board member, argued in a speech in Paris that her experience trying to use credit cards to pay for taxis across the continent illustrated “the many obstacles and hurdles we still have to overcome in order to provide the citizens of Europe with a cashless means of payment that can be used throughout the region in a harmonised manner”.
The slow implementation of Sepa has disappointed the ECB, which believes greater financial integration is needed to take full advantage of continental Europe’s monetary union. Its website notes that, “despite some progress, Sepa has lost some momentum”.
In Brussels on Thursday the European Commission formally called for more support from public authorities in the region, and suggested setting a firm “end-date” for the project.
“An end-date for Sepa migration would bring certainty to the migration process, thereby increasing current commitment and also reducing the costs of running duplicate payment systems during the migration period,” the Commission said.
But officials added that they were still consulting on how this might be done, while one big retail trade association – Eurocommerce – warned that all the “problems and uncertainties” that had surrounded Sepa would have to be resolved first.
Commission officials suggested that the financial and economic crisis might have been partly responsible for the lack of progress, deterring businesses from making necessary investments in Sepa. But others say that the key problem is that the project is driven more by political objectives than strong market demand.
Ms Tumpel-Gugerell, meanwhile, has argued that a necessary ingredient for success is the launch of a new European card scheme, to match Visa and MasterCard. She was “very much concerned” that small national systems – for instance in the Netherlands, Finland and Ireland – would be replaced by international schemes.
“Europe needs Visa and MasterCard, since they are currently the only schemes that offer a pan-European card payment solution. But we also need sufficient competition,” she said.