The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
The European payment landscape is going through a considerable transformation due to technological developments, entry by new actors and regulatory changes. We interviewed Etienne Goosse, soon to retire from his position as Director General of the European Payments Council (EPC). We asked him for his perspective on past, ongoing and future developments and achievements in European payments and at the EPC.
You have been the Director General of the EPC since 2011. How has the European payments landscape changed over the years?
Regulation, dialogue, harmonisation, digitisation and acceleration are the five key words that immediately come to my mind to describe such evolution.
Let me start with regulation: the Single Euro Payments Area (SEPA) end-date Regulation which made the migration to SEPA a full reality, the revised Payment Services Directive (PSD2) which brought more security requirements and created the first legal framework for what got called “open banking” (but the lessons of which should be learned for its forthcoming review), the General Data Protection Regulation (GDPR) which was a landmark legislation on the data protection front (which however created some (most likely unintended) obstacles for the payment industry to fight effectively against payment fraud).
Dialogue between all stakeholders became a fundamental, permanent feature and success factor for developing and evolving European payments (e.g. the SEPA payment schemes at EPC level), which the best way to meet market needs and foster wide adoption, whilst ensuring consistency with European public policy objectives.
Harmonisation is what the EPC has relentlessly tried to facilitate to achieve the SEPA vision through SEPA payment and payment-related schemes and related initiatives (e.g. a QR-code standard to support SCT (Inst)-based payment transactions at the Point of Interaction (POI)). On the other hand, the European payment landscape although integrated is still characterised by a significant diversity of behaviours and situations at country level in spite of common trends and achievements.
Digitisation of payments is best illustrated by the strong decrease of the share of cash in day-to-day, face-to-face retail payments over the last decade even though there remains a large degree of heterogeneity in cash usage patterns across Europe.
Not to forget the acceleration of the evolution of the European payment landscape due to the following main drivers: regulation, customer behaviour change, technological progress and of course the Covid-19 pandemic. This trend should however not leave behind those European citizens that are more vulnerable and/or find it hard to cope with such change.
Can you tell us about the most significant achievements of the EPC over the last decade?
Actually, I believe that the list is long… But first of all I would like to stress that such “EPC achievements” should actually be considered as collective achievements by the European stakeholder communities closely involved (i.e. payment service providers (PSPs), corporates, merchants, consumers, technical players, not to forget the steering, regulatory and catalytic role of public authorities), which were facilitated and supported by the EPC. Now to be concrete but short let me simply give a few facts and figures summarising the last decade:
- the first three SEPA payment schemes (SEPA Credit Transfer (SCT), SEPA Direct Debit (SDD) Core and Business-to-Business (B2B)) that were launched in 2008-2009 have been successfully deployed across Europe; there are now five EPC payment schemes thanks to the addition of the SEPA Instant Credit Transfer (SCT Inst) scheme in 2017 and the One-Leg Out Instant Credit Transfer (OCT Inst) scheme (covering international payments) in 2023; they represent in total on an annual basis over 46 billion transactions (2021 data) and are continuously growing;
- three payment-related schemes (i.e. SEPA Proxy Lookup (SPL), SEPA Request-to-Pay (SRTP) and SEPA Payment Account Access (SPAA)) vs. none until four years ago; they were designed to support and facilitate the overall payment journey;
- progressive opening of the membership, governance and decision-making structure of the EPC (which was originally - in 2002 - created and developed by the European banking industry) to all categories of regulated PSPs (with the inclusion of payment institutions, electronic money institutions and third-party payment providers);
- 36 countries in SEPA with a further expansion being contemplated in Eastern Europe which may materialise provided the objective required conditions be met;
- standardisation and interoperability guidance for the use of cards (first within the EPC and since 2016 through the European Cards Stakeholders Group (ECSG), recently renamed European Payments Stakeholders Group (EPSG)) and SCT (Inst) based solutions at the POI.
But the EPC should not rest on its laurels as there is still a lot of work to do to ensure a full deployment of SCT Inst and the exploitation of its “game-changing” potential, the successful market launch of OCT Inst and SPAA and the progressive take-up of SRTP which is now “steady and ready” with concrete implementation plans in several key European markets. The strive to maintain its SCT and SDD schemes “fit for purpose” should also remain one of the main objectives of the EPC.
Finally, the EPC should in my opinion continue to consistently nurture its fundamental and intrinsic “culture” and practice built over the last decade of openness, transparency, predictability, neutrality and agnosticism, cooperation, technical competence, ability to unite and deliver, as a trustworthy central, private sector (but not profit-making) body contributing to harmonised, efficient, market needs-based, innovative and safe payments in Europe.
What do you think about the digital transformation of payments today?
It is remarkable, unavoidable and brings benefits (to be seized and fairly shared) but also challenges (to be addressed) and risks (to be mitigated) to the European economy and European citizens, PSPs, companies, small and medium-sized enterprises (SMEs), merchants and public administrations. Among the key challenges and risks I would cite inclusion, user convenience, resilience and fraud. As payments are based on trust which is itself grounded in security, all stakeholders should together wage the “fraud battle” proactively and continuously.
Finally, what do you see as the most likely drivers and facets of the evolution of European payments towards 2030?
I do unfortunately possess no particular divinatory skills…2030 is both close and far away…I will however be brave and start by saying that, barring a major “shock” to the overall European society or economy or specific to the “payment ecosystem”, we should see “more of the same” in terms of key drivers (namely, regulation, technological change, customer behaviour) and their high level impact, which I tried to describe earlier. But there are however some key uncertainties around some potential, very impactful new developments among which I would single out the fate of Central Bank Digital Currencies (CBDCs) (e.g. the “digital euro”) as well as the willingness and ability of the European payments industry to federate behind and successfully accomplish the vision for a common pan-European POI payment solution.
May I venture a final, general advice whatever one does in payments: never forget the customer (who has a choice and hence decides) or the fraudster (who in ever more sophisticated ways tries to “beat the system”) or the planet (payments, too need to be more sustainable). Then, of course, there are the famous “unknown unknowns”…See you in 2030!
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