‘European payments integration in the form of the Single Euro Payments Area is slowly but gradually advancing. Building on the core initial deliverables, in the form of the SEPA credit transfer and direct debit schemes (and not forgetting the SEPA cards framework), increasing attention is now being given to various aspects of what is sometimes referred to as the ‘e-SEPA’ agenda, including the role that innovative payment channels such as the mobile have to play.
If you read recent studies on the level of ownership of mobiles and their increasing usage for banking applications, it is hardly surprising that this topic is becoming of interest in a SEPA context. For example, one recent study predicts an annual growth rate of more than 20% for the number of m-payments users, expecting m-payments to reach the 1bn users/$1trn transaction mark over the next five years.
Another study suggests that, compared with only 18 months ago, the percentage of respondents who said they have used their mobile device for banking has more than doubled to 46% worldwide, while the percentage that have used it to buy goods and services has risen from 10% to 28%.
Against this background, the European Payments Council (EPC), the coordination and decision-making body of the European payments industry, has recognised the mobile channel is an ideal launch pad for SEPA payment instruments, leading to the decision to prepare its first White Paper on mobile payments, which was published in July.
With a plethora of individual mobile payment solutions already available in the market the White Paper focuses on how mobile payment services can be delivered through cooperation between service providers in the broader ambition of an integrated Single Market for Euro payments.
The stated goals of the White Paper are to:
- Inform stakeholders of EPC’s commitment to mobile payments in SEPA;
- Describe the business rationale for entering the mobile payment services market;
- Demonstrate the customer adoption potential of mobile payments by presenting several realistic and illustrative scenarios for the use of mobile payments;
- Outline the prioritised categories for mobile payments (from the EPC’s perspective);
- Specifically analyse mobile contactless SEPA card payments; and
- Collect stakeholder views and feedback.
The document predominantly focuses on mobile contactless (proximity) card payments, while also looking at some aspects of mobile remote payments. In practice, the intention is to build on the existing SEPA credit transfer (SCT) and direct debit (SDD) schemes as well as the SEPA cards framework.
This is in line with the thinking of the European Central Bank, which is also keen to see harmonised scheme solutions for proximity m-payments that are not only based on card payments but also re-use the SCT and SDD schemes.
The EPC is collaborating with mobile operators and other stakeholders to process work on the necessary standards and business rules in terms of initiation and receipt of SEPA payments through mobile phones. For this purpose, the EPC has joined forces with MobeyForum, the global cross-industry consortium whose mission is to create the mobile financial services ecosystem and to enable banks to offer mobile financial services.
The delivery of a harmonised standards framework for sending and receiving mobile payments and direct debits/card payments in SEPA is an urgent requirement to get the project off the ground. Ultimately though, the degree of success will of course depend on individual banks’ business objectives and the commercial deployment of these services.
Each payment service provider needs to determine if, ultimately, it has a business case, which will differ for each provider depending on the customer base, business strategy and objectives, geographical environment, technical infrastructure, available resources and expertise.
Other factors will nevertheless influence the m-payments proposition to become a new synergy driver – for example, in future everyone (most probably!) will have a smart phone as they gradually become more cost-efficient to provide than limited-service phones. These smart phones will be like mobile mini-PCs giving banks additional possibilities to provide more services and explore synergies arising from mobile customers.
In that kind of market there is a need to go for long-term solutions based on small margins but large volumes. Every new synergy-level will in one way or another impact on the number of legacy service providers – which is, of course, what SEPA is also about.’
Ruth Wandhöfer is EMEA head of market policy and strategy at Citi Global Transaction Services