/ world today news/ In July, the European Central Bank (ECB) officially announced the European Payments Initiative (EPI). Behind-the-scenes talks on this matter have been going on since last year, but then the project was called differently: “Pan-European Payment Systems Initiative (PEPSI)”. About 20 European banks participated in the preparation, mostly French plus the German “Deutsche Bank”
The ERI project aims to create a pan-European retail payment system to break free from the dictates of the American payment systems Visa and Mastercard, which became monopolies in the last century.
According to Retail Banking Research, 2.2 billion Visa cards and 1.9 billion Mastercard cards were in circulation last year. Plus, the smaller American systems Diners Club (107 million cards) and American Express (70 million cards). It’s hard to compete with them. It is true that the Chinese corporation “Union Pay” entered the arena and issued more than five billion cards (this exceeds the total number of bank cards of American origin), but “Union Pay” cards mainly serve China and neighboring Asian countries. And the American cards “Visa” and “Mastercard” have long since become global and almost completely conquer the European market of retail payments. In 2016, their share in the total number of bank cards circulating on the European market was 86%, last year – 90%. Many European cards failed to compete with Visa and Mastercard and died; most European cards have such a systemic drawback as limited validity in the country where the card was created.
Europeans were not very worried about the dependence of the “cards” on the USA until Donald Trump came to the White House, worsening relations not only with Russia, China, Iran, Venezuela, but also with Europe. There have already been many cases of Washington blacklisting European companies that have violated US sanctions against Russia, Venezuela and Iran. It got to the point where Trump began threatening to impose sanctions on Spain, which he suspected of violating US sanctions against Venezuela.
The Europeans are trying to get out of the US sanctions by creating a special (SWIFT alternative) payment system with Iran – INSTEX, and after the return of Crimea to Russia, Washington began to draw up blacklists of Russian banks that operate in Crimea or carry out transactions with banks operating in Crimea. The U.S. Treasury Department requires American corporations Visa and Mastercard to exclude their respective Russian banks from their systems. The first card sanctions were taken by Washington against the banks “Russia” and “SMP” in the spring of 2014. Russia’s reaction was to create its own “MIR” card: the first cards were issued in 2015. This card is increasing its influence on the market for retail payments, but the positions of “Visa” and “Mastercard” remain very strong.
Today, the “Mir” map is no longer purely Russian; based on international agreements, it is used in the neighboring countries of the Russian Federation, in Turkey. Negotiations are underway for the use of the “Peace” card in Vietnam, Thailand, China, Bulgaria, but the “Peace” card cannot come to Europe. It would be too bold a challenge for Washington.
So, Europe two or three years ago realized that it should prepare in advance for the worst scenario (blocking of American cards in the EU) and start creating its universal card that serves the entire European space. Some experts believe that Europe is influenced by the example of Russia, which created its own payment card, which slowly squeezes the positions of American cards in the market and even goes beyond the borders of the Russian Federation, becoming international. In connection with the growth of anti-American sentiments in Europe, another argument in favor of a pan-European card appeared: the American companies “Visa” and “Mastercard”, controlling the market of non-cash payments in the EU, have access to information about the personal data of EU citizens. But these American companies are monitored by the American special services, under whose umbrella the Europeans find themselves.
Here are some details on the ECB’s official announcement on the European Payments Initiative. 16 banks from five countries announced their participation in the project. These are the Spanish banks BBVA and Santander, the French banks BNP Paribas, Credit Agricole, Credit Mutual, Societe Generale, La Banque Postal and BPCE, the German Commerzbank, Deutsche Bank, DZ BANK” and “Sparkase”, the Belgian KBC, the Italian “Unicredit” and the Dutch ING.
One of the participants in the project – the Spanish bank BBVA – announced that the European Payments Initiative will focus on direct instant transfers from card to card. The cards can be used to withdraw cash from ATMs and pay for purchases of goods and services in any eurozone country. “The European payment system will have to solve the problem of fragmentation of European retail payments and cover all the countries of the euro area and eventually the entire European Union,” ECB Governing Council member Fabio Panetta commented on the news.
The existing infrastructure, mainly the TIPS system, will reportedly be used to create a pan-European retail payment system. Its full name is TARGET Instant Payment Settlement. The system was launched within the Eurozone (19 countries) for urgent and round-the-clock payments to individuals and legal entities; created on the basis of the TARGET-2 system, intended for payments between the central banks of the member countries of the euro area, as well as between these central banks and the ECB.
And the last thing. The banks that have joined together to create the new system are inviting other credit organizations to join the project (the invitation is valid until the end of 2020). A common European payment system is due to start operating in 2022 – first in the Eurozone and later throughout the European Union. According to experts, it will be possible to conclude an agreement between the new European system and the Russian system “Mir” for mutual acceptance of cards.
Translation: V. Sergeev
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