European Central Bank (ECB) executive
board member Gertrude Tumpel-Gugerell has reinforced her commitment
to a third European card scheme to compete with Visa and MasterCard
and to ensure the success of the Single Euro Payment Area
In a recent speech at the European Financial
Management & Marketing Association conference on cards and
payments, Tumpel-Gugerell said: “In my view, yet another ingredient
necessary for the success of SEPA is a new European card scheme.
The ECB has made a clear request to the European banking industry
for the creation of such a scheme.
“Joint research by De Nederlandsche Bank and
the ECB has shown a new European card scheme could provide a
decisive impetus to solving interoperability and overcoming costly
fragmentation in the European market for cards. Consumers and
merchants in the card payments market are likely to benefit most
from SEPA if there is sufficient competition.”
She went on to explain that the larger
international card schemes could overtake some of the smaller
national ones if left unchecked.
“The market for card schemes is in a decisive
stage of development,” Tumpel-Gugerell added. “We are very
concerned about the possibility that small national schemes such as
Dutch, Finnish and Irish schemes, will be replaced by the
international schemes. I would invite the banks behind these
schemes to also consider the possibility of joining one of the new
European card initiatives.
“Let me clarify once more that Europe needs
Visa and MasterCard, since they are currently the only schemes that
offer a pan-European card payment solution. But we also need
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Standardisation and interoperability
Technical standards on
interoperability, security and market access also need to be laid
down if SEPA for cards is to work.
Tumpel-Gugerell said: “Without such detailed
standards, I fear technical fragmentation in Europe will remain in
place or even be re-established. Therefore, I believe SEPA for
cards will not be a realistic undertaking unless there are
Global EMV standards organisation EMVCo and
the Payment Card Industry Council were both mooted as organisations
the European Payments Council should carefully consider joining in
order to exert more influence within them.
Tumpel-Gugerell also spoke about the current
levels of interchange fees in Europe, stating they could certainly
“One can certainly find alternative ways and
arrangements for replacing the multilateral interchange fees,” she
said. “However, before entering into complicated undertakings and
setting up new structures, a banker should not disregard the
possibility of lower interchange fees being translated into higher
earnings through the volume effect.
“Recent research work focusing on the Spanish
market in the period from 1997 to 2007 found evidence that banks
were even better off after the intervention of authorities on
interchange fees because the increase in the volume of transactions
offset the decrease in per-transaction revenue.”
E-payments and m-payments were raised as a
possible solution to some of the fraud issues facing SEPA.
“SEPA provides a unique opportunity for a
breakthrough regarding these e-payments and m-payments, building on
the basic SEPA Credit Transfer and SEPA Direct Debit schemes, and
on SEPA for cards,” Tumpel-Gugerell added. “Linking up with the
cards dossier, e-payments could be the answer to security concerns
many professionals and consumers have about ‘card-not-present’
On the topic of new payment methods,
Tumpel-Gugerell said it was important banks keep as up to date as
“I see the risk banks may lose ground in this
field if not adapting fast enough to the changing technological
environment and to changing payment habits,” she said. “We urgently
need sufficient co-ordination and commitment at the European level
for establishing competitive solutions for e-payments and