As European banks continue to establish standards for a Single Euro Payments Area, not nearly as much attention has focused on a similar process for ecommerce or mobile payments in the euro zone.
Until now.
The importance of all payment systems working in unison for SEPA was made clear Jan. 11 in a European Commission green paper calling for creation of a competitive ecommerce payment system and standard mobile-payments framework.
At its core, the green paper brings public debate in Europe to the forefront about how the processing of card, ecommerce and mobile payments can best fit into a single euro market (
Almost immediately, industry analysts and payments providers applauded the green paper as a signal the executive body of the European Union acknowledges what many payments experts in Europe have been requesting as online and mobile payment use have continued to grow.
Regardless of what happens next, the green paper makes statements “that had to be made” about the payments industry in Europe, one analyst contends.
“My immediate reaction is that it is a very welcome recognition by the European Commission of the increasing overlap and the blurring of boundaries between cards, e-payments and mobile payments, as all three are addressed in the paper,” Zil Bareisis, a London-based senior analyst for research firm Celent, tells PaymentsSource. “It’s also an admission by the European Commission that while SEPA is gaining momentum for credit transfers and direct debits with the deadlines [for bank preparation] looming, a lot more needs to be done in the area of cards and other retail instruments to achieve the vision of an integrated European market.”
Presently, public input in Europe on the future of electronic commerce indicates that different payment methods in each country represent the main barrier for industry growth, the paper suggests.
If SEPA planners and European consumers address the ecommerce and mobile-payment issues as intensely as they pushed banks to prepare for SEPA standards, “Europe has an opportunity to be at the cutting edge of what ‘making a payment’ could mean in the future,” the paper states.
The paper contends the “mass take-up” of smartphones changes the payments landscape because of new applications for digital wallets or electronic purses replacing physical wallets and payment cards.
Gareth Lodge, a London-based industry analyst with Celent who has conducted research on SEPA planning as it relates to payments preparation for nearly 10 years, warns that a commission statement does not particularly solve anything.
The green paper represents only “a vision” for payments in Europe, Lodge says. “As such, it’s easy to wearily shake your head at the naivety of it all, rather than applaud perhaps what they’re trying to achieve,” Lodge says.
Determining whether the paper produces any productive results ultimately will determine its value, he adds.
A Visa Europe spokesperson echoes the desire for results while telling PaymentsSource the card association’s view of payments in relation to SEPA coincides with the green paper assertions.
Visa Europe contends the commission should focus on creating a level playing field by ensuring an end to surcharging, establishing agreed-upon methods for determining interchange rates, and supporting industry innovation and standardization of payment technologies, asserts spokesperson Amanda Kamin.
The commission green paper position is central to Visa Europe's strategy, Kamin says. Visa Europe invests 100 million euros per year in e-commerce and mobile-payments innovation in working to provide the type of standardized products and services the green paper suggests, she adds.
“Providing the security required by consumers, retailers, businesses and standards that allow member payment-service providers to vigorously compete in the European market is at the heart of these innovations,” Kamin notes. “This will eliminate the real barriers to a fully integrated European payments market.”
Europeans will likely notice four key factors¬–more business competition, more payment choices and fee transparency for consumers, more innovation, and more payment security¬–acting as the engines promoting a common payments method, the paper speculates.
However, Lodge suggests that particular assertion in the green paper shows a “growing gap between vision and reality” because in 10 years of SEPA preparation, “there would seem to be little evidence to support any of those engine drivers.”
With a 2014 deadline looming for SEPA to be in place, the key question will be whether SEPA has, or ever will, work as defined by those four factors, Lodge suggests.
The lack of a concrete European framework for electronic payment and addressing such main concerns as technical standards, security, internal operations and cooperation between market participants could translate into similar fragmentation for mobile payment methods, the paper suggests.
The paper reminds Europeans that the commission’s SEPA vision for electronic payments was such that “no distinction between cross-border and domestic payments” should take place. In other words, the commission’s goal is a true single, digital market for the euro zone.
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