PEPSI : for the love of European payments

PEPSI, an acronym that means Pan European Payment System Initiative is the latest attempt in building a pan European payment system. The announced goal is to develop a standard based on instant payment capable of managing all dematerialized forms of payment, either by card, transfer, direct debit or mobile.

Already for many years, many considered European sovereignty was at risk when we use global, in fact American, payment processors for international payment transactions, even within Europe. Let’s not forget that Europe is the second world economy in aggregated GDP terms and that there is no reason why transactions between Europeans would be processed on the other side of the Atlantic Ocean.

However, not all European countries have the same feeling about their relationship with leading payment schemes. France keeps on defending its Cartes Bancaires national scheme, while, in some other European countries, all transactions, even domestic ones are processed according to Visa or Mastercard rails.

Of course, political changes in the US have made the concern of European payment sovereignty more pervading: when the US are progressively disengaging from the international scene and at a time of political and commercial tensions between the US and the EU, many strategists consider Europe should have more political standing and should set up a European-level strategic thinking and economic strategy. However, the past experience shows national governments often make their own short term interest go ahead and block a more strategic European vision.

The PEPSI initiative is a clear affirmation of sovereignty against Visa and Mastercard, and to a lesser extent against China UnionPay, RuPay, Mir and others. It is driven by the ECB (European Central Bank) along with twenty European banks, including BNPParibas, Deutsche Bank and other major financial institutions in Italy, Germany, France, the Netherlands, Belgium, Portugal and Spain. The decision to go ahead with the project is to be made in December 2019.

Let’s just remember we have witnessed many such projects in the past: the very existence of Europay from 1992 before its acquisition by MasterCard in 2002, PayFair in 2007, Euro Alliance of Payment Schemes (EAPS) in 2008 and Monnet in 2009. Let’s hope that the world political changes will make PEPSI more successful than past attempts.