The European Central Bank (ECB) has voiced its support to the move by some of the largest European banks to set up a pan-European payment system to challenge the dominance of Mastercard and Visa in the EU market.

The Pan European Payment System Initiative (PEPSI) is being supported by 20 banks of France and Germany.

The PEPSI, which will manage all types of cashless transactions, will also checkmate the US and Chinese dominance in the European card payments market.

ECB executive board member Benoît Cœuré recently said he wants to see “a strong commitment from the proponents of the new initiative and a clear roadmap to meet the envisaged objectives so that we can see tangible actions emerge soon.”

“Proponents should also work closely with the European Commission to ensure that any project will be open and comply with EU competition rules,” Cœuré added.

“Dependence on non-European global players creates a risk that the European payments market will not be fit to support our Single Market and the single currency, making it more susceptible to external disruption such as cyber threats, and that service providers with global market power will not necessarily act in the best interest of European stakeholders.”

PEPSI will be based on SEPA credit transfer

The ECB, which has been supporting the idea of a home-grown cross-border scheme, said that the proposed solution would be based on the SEPA credit transfer instant scheme.

Cœuré also urged for public initiatives to help the private sector to support industry-led solutions. He further said that the ECB can enact a law that will mandate service providers to adopt instant payments within a definite time frame.

For technical assistance, Cœuré said that the Eurosystem should offer technical assistance where ever required. It can help in finding a suitable solution that can ensure the timely integration of SCT Inst-compliant clearing mechanisms.