‘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:

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  • 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