For two years, some of Europe’s banks have
touted the idea of establishing a new pan-European debit card
scheme to challenge Visa’s V Pay and MasterCard’s Maestro, but
despite intermittent activity (and the backing of the European
Central Bank) nothing concrete has emerged.

The proposed scheme, known as ‘Monnet’, is one
of several ideas that have been touted by European banks and
payment players as they explore ways to break the stronghold that
Visa and MasterCard have in Europe.

But so far, the establishment of such schemes
has been stalled by confusion over what form they would take:
whether they would be developed and implemented completely from
scratch, or whether they would leapfrog on the back of existing ATM
and debit network infrastructure across Europe.

The ongoing uncertainty over the issue of
interchange in Europe has also, so far, helped to stall any further
development. Currently, of the three proposed schemes to have
emerged – Monnet, PayFair and the Euro Alliance of Payment Schemes
(EAPS) – only the latter has managed to establish a tangible
presence by building on existing technical infrastructures.

EAPS is based on links between six domestic
card schemes from Germany, Italy, Spain, Portugal, the UK and
interbank network EUFISERV, and envisages that cards of the issuers
involved will be accepted at all of the terminals of participating
card acquirers.

PayFair is a private initiative comprising a
merchant-orientated debit card scheme but has not gained any
significant traction or interest.

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French and German banks forge

However, Hermann-Josef Lamberti, COO
of Deutsche Bank, is again talking up the prospect of a third
pan-European debit scheme, telling a conference in Frankfurt that
several financial institutions, including Société Générale and BNP
Paribas, are planning to formally establish a group of banks by
October 2009 to move ahead with the Monnet scheme.

Although at this point Monnet remains only a
concept, according to Lamberti, the scheme will begin to gain
momentum and “evolve into a solid European system” once the rest of
the European banking sector sees that the major German and French
banks have committed themselves to its establishment.

Hans Georg Fabritius, a board member of
Germany’s Bundesbank, told the same conference that while a Visa
and MasterCard duopoly is “an unsatisfying vision” for economic and
political reasons, Monnet needs to be put into action sooner rather
than later and have as much pan-European backing as possible if it
is ever to become more than just a concept.

The aim is to have banks from 31 European
countries join the new scheme.

A viable threat?

But the success of Monnet may be dependent on
the strength of its participating banks given the systemic shocks
occurring in Europe’s banking industry over the past couple of
years, which led many banks to the brink of collapse.

It would appear that getting hold of the
investment needed to implement the massive ATM and POS terminal
infrastructure, sign up merchants to the scheme and roll out
payment routing and processing capabilities needed to rival Visa
and MasterCard may be the obstacles that could see Monnet stuck
firmly on the drawing board.

Just how viable Monnet is has caused
considerable debate between payment industry experts.

Gwenn Bézard, research director at US payment
consultancy Aite Group, is very much of the view that the incumbent
payment networks need to sit up and take the threat seriously.

“The fact that Visa Europe is owned by
European banks is clearly not enough, as regulators and some banks
continue to push for something strictly native to Europe,” Bézard

“If German and French banks seriously line up
behind such a project, and consolidate their existing debit
networks under such an entity, such a venture will have a great
chance for success.

“Regardless of what direction some banks will
take with this, Aite Group believes there will be more room for
competition for Visa in Europe, not less, because the national
barriers to competition will fall and the rules will be
pan-European, with a strong anti-trust stand from the European

“Regulators will not allow for a new monopoly
to emerge, even if it is a native European one,” Bézard added.